Business Studies
Class test: Ethics
Time: 60 Min - Marks: 50
NEWS
Get your news before it happens!
OUTsurance apologises for
‘legless’ advert
Tuesday 19 February 2013 19:17
SABC
OUTsurance states that the advert was submitted The Stars on at
midday last Thursday – coincidentally the day Pistorius was
arrested in connection with the murder of his girlfriend, Reeva
Steenkamp.(REUTERS)
OUTsurance has apologised “for any offence caused” by the
controversial advertisement that depicted a pair of legs from the
waist down with the left leg missing from the knee down, below
Oscar Pistorius’ picture on the front page of The Star newspaper
today.
The text of the advertisement has been shaped to fill in the
“missing” portion of the left leg to read “Do you have the right
insurance cover should your life suddenly change?”
According to the statement released by John Smith (Public
Relations Manager) from the insurance company earlier today, the
advertisement was created by their company’s internal design
team in October last year as part of a print campaign highlighting
the company’s disability needs.
It is further stated that the advert was submitted to the newspaper
on at midday last Thursday – coincidentally the day Pistorius was
arrested in connection with the murder of his girlfriend, Reeva
Steenkamp.
“We did not foresee the potential light in which the advertisement
could be interpreted,” reads the statement in part. “While we were
aware that the chosen advertisement would appear on the front
page of the newspaper, we neither could have predicted, nor
instructed the newspaper to particularly use it alongside the
headline story they chose to publish.”
SA HEALTH CARE IS SICK!
South Africa, had its health system modernise in the year
2000, yet rural area health care is getting worse, not better,
with each and every passing day. Currently our infant
mortality rate is 6 times higher than in the OECD countries.
About 5.5 million South Africans have HIV/AIDS or 10.6%
of South Africa's total population with 17% of the adult
population that lives with this dreadful illness. Most of them
live in rural South Africa. Death rates from these are
extremely high. But what else adds to such a burden?
Apart from the high burden of infectious diseases, a lack of
much needed medicines and essential medical equipment,
incompetent management you'll also find that there is a
chronic shortage of qualified doctors and nurses which
makes the country's situation much worse. Currently South
African medical staff and other public servants working
abroad or outside South Africa would have brought
in $14billion annually in revenue towards the South African
economy. Imagine how many more healthcare facilities,
treatment, equipment, ambulances and personnel that
would've produced looking after the sick and infirm!
On average HIV/Aids patients living in rural areas of South
Africa need to travel 96kilometers to get to his/her nearest
medical facility. Pathetic really. No wonder these patients
bodies collapse or give up before they even reach the
gates of a hospital. Then there is the small matter of the
actual medical facility itself and the state its in.Zithulele
for example is a hospital in rural South Africa and
yet this hospital has no intensive care unit and not
even a damn ambulance to begin with.
REQUIRED
Compile a business report to the Public relations manager of NEWS 34, in which you respond to the articles
you have read.
You suggest a follow-up article where you critically analyse this news and respond with a guide to readers
on ‘Ethics in the new day and age’.
Lead the readers to an understanding of business ethics, include why it would be necessary for Outsurance
as well as our Government to implement ethics within their fields.
Cross analyse the two articles and give a detailed account of all the ethical theories out there and how they
are related to these articles. Not allowing the readers to be naïve, give a brief account of other issues that
are possibly going on in these two organisations.
Conclude by explaining the concept of the code of ethics and suggest how you would use it as a tool to
rectify the above issues.
TOTAL: 50 Marks
Business Studies
Class test: Ethics
Time: 60 Min - Marks: 50
Question:
Compile a business report to the Public relations manager of NEWS 34, in which you respond to the articles
you have read.
You suggest a follow-up article where you critically analyse this news and respond with a guide to readers
on ‘Ethics in the new day and age’.
Lead the readers to an understanding of business ethics, include why it would be necessary for Outsurance
as well as our Government to implement ethics within their fields.
Cross analyse the two articles and give a detailed account of all the ethical theories out there and how they
are related to these articles. Not allowing the readers to be naïve, give a brief account of other issues that
are possibly going on in these two organisations.
Conclude by explaining the concept of the code of ethics and suggest how you would use it as a tool to
rectify the above issues.
To: Public relations manager of NEWS 34
Date:
Topic: Ethics in the new day and age
INTRODUCTION
Business Ethics
 The concept of good business practice refers to the standards of professionalism, accountability, ethics and
effective business practice that should be conducted.
 As stated in point 1, Professional behaviour is guided and prescribed to by Professional codes which stipulate that
there are predetermined consequences for Professionals that do not act in accordance with the specific
Professional code.
 If the employee does not belong to a Professional organisation, it is sometimes not clear what is regarded as
unethical behaviour, because ethical behaviour is also part of an individual’s values and morals.
 To complicate matters even more:
o Unethical actions are not necessarily illegal, e.g. it is not illegal to sell goods of a poor quality at a high
price, because we live in a free market economy.
o BUT all illegal acts will be seen as unethical, thus it will be illegal (and therefore unethical) to sell petrol
below the price that Government determines - even if selling it at a lower price may be to the advantage of
consumers.
Ethics in Government
Government says it is implementing appropriate policies to prevent corruption.
 One such initiative to fight corruption is the National Anti-Corruption Forum (NACF).
 South Africa also has a National Crime Prevention Strategy and a result of this is the Code of Conduct for the
Public Service that governs the behaviour of civil servants.
 Parliament has also established an Ethics sub-committee that developed the Code of Conduct for Members of
Parliament.
 Despite all of these efforts aimed at fighting corruption in government, the daily misappropriation of funds and
other corrupt activities by officials continues to occur. Unfortunately, as a result of these bad apples, all
government officials are tarnished by the same brush. Nevertheless, there are many honest and dedicated
people who are committed to doing good work in the public sector.
Ethical theories:
 The Principle-based theory: It states that the person’s principles, values, morals or ingrained set of rules about
what is right or wrong, will determine if the person sees the action as ethical or not, as the following examples
show: If I have done something wrong, I should accept the consequences because it is wrong to lie, even if it
means I can avoid punishment. If I have a deadline to meet, I cannot feign illness and “phone in sick”. If it means
the deal is not concluded, because I refuse to pay a bribe, then so be it …
 According to the Consequence-based theory, the outcome (consequence) of the action will determine if the
action is ethical or not. For example: It is OK to lie to my mom/boss/friend, if I know the truth will upset her.
 If we look at the Utilitarian theory, the decision of ethical or unethical action is based on what is best for the
greatest number of people. For example: If I pay a bribe the business will get the deal and I will create jobs for a
large number of people, so it is OK to pay the bribe!
Other ethical issues:
Conflict of interest
 If the person awarding a tender knows the person who is submitting the tender, he/she should not make the
final decision about who will get the tender, but should disclose that it is a friend/family member submitting
the tender and then withdraw from the tender allocation process.
Bribes and corruption
 When someone is offered a reward to give a third party an unfair advantage to which he/she/the business is
not entitled, it is a bribe. A bribe does not have to be in the form of money, but may be a gift, an offer of
employment, a promotion or any other favour. If it is in the form of money, it is sometimes referred to as a
smoothing payment or a facilitation payment.
Unauthorised use of funds
Using business funds that are not authorised is the same as theft. People working in offices have more opportunities
to get involved in this form of white collar crime, than the workers in the manufacturing department.
Inappropriate gifts
Most businesses expect employees to declare all gifts that they have received. It may even stipulate that no
employee may receive a gift greater in value than R… (a certain value). Why do you think this is the case? One
possible reason is that it could be interpreted by others as being a form of bribery, even though it truly is a gift with
no strings attached.
Sexual harassment
The Labour Relations Act that stipulates that sexual harassment is a criminal offence.
 According to the above mentioned code, examples of sexual harassment may include:
 Unwelcome physical contact



Verbal conduct such as sexual advances, sex-related jokes, unwelcome enquiries about a person’s
sex life and unwelcome whistling/body language directed at a person or group of persons
Non-verbal conduct such as sexual gestures, indecent exposure or display of sexually explicit pictures
and objects
When a more senior employee promises a reward in exchange for sexual favours
Unfair advertising
Employment / labour issues
There are a large number of issues that can be discussed under this heading, namely:
 Employees abusing sick leave
 The abuse of the internet or email may include:
 Employees who visit porn sites
 Employees who make confidential information available to people who should not have access to
the information.
 Employees who spread rumours or other damaging information about the business or a fellow
employee
 Employees who spend work time on Facebook or other social media sites
 Employees spending time on personal emails during work hours and employees who send emails,
which could bring the business into disrepute, to other people.
 Taking business stationery home for private use
 Verbal abuse of staff members by a manager and the verbal abuse of a colleague or manager by an
employee are all unacceptable behaviour.
Pricing of goods
 Price fixing occurs when competitors agree to charge the buyers a predetermined price. One of the
principles of a free market economy is that competition keeps prices low and quality high. If businesses
collude to fix the prices of products, it is unethical and illegal and the Competition Board may impose hefty
fines. Directors may even be held liable for this in their personal capacity and face jail time.
"Insider trading"
This refers to a situation where someone trades shares on the JSE based on knowledge that is confidential, i.e.
something only an insider (or his friends / family) in the business will know. This is a criminal offence.
Piracy
Piracy is the illegal use or reproduction of somebody’s work if it is protected by a patent or copyright. Think of the
number of times that music or movies are illegally downloaded from the internet…
Counterfeiting / Bootlegging
 Counterfeiting can be described as someone fraudulently imitating another’s work and pretending it is the
original. Designer clothing, shoes and handbags are often imitated and sold as the original.
 Bootlegging is the illegal production and/or distribution of a product. A shebeen that does not have a liquor
licence is guilty of bootlegging. Another example is when someone sells cigarettes on the black market to
avoid paying import duties or other taxes.
Taxation
We differentiate between tax avoidance and tax evasion.
 Tax avoidance is legal and ethical, because the business finds legal ways to reduce the tax burden, i.e.
deducting legal expenses before the taxable income is calculated.
 Tax evasion on the other hand is illegal (and therefore unethical) because the business does not declare all
its income and lies about expenses in order to pay less tax.
Whistle-blowing
A whistle-blower is someone who exposes unethical behaviour, fraud, health and safety violations or the violation of
a law. Consider the possible impact on a business when an employee, who is aware that something unethical is
happening, blows the whistle and in the process the business loses the deal or even faces a huge penalty. Who has
acted unethically, the business or the employee for exposing the action? Whistle-blowers are protected by law,
because in South Africa it is illegal to fire an employee for whistle-blowing.
Code of ethics
Having looked at different examples of unethical behaviour in the business world in the previous section, it should
be clear that every business needs a Code of Ethics. A Code of Ethics will be based on the business’ core values and
can be described as a set of guidelines and rules that will enhance (improve) business honesty and integrity.
Here are some reasons why a Code of Ethics is important:
 A code of ethics communicates the ethical vision of the business, but also covers specific issues that govern day
to day behaviour.
 A code of ethics creates a common framework for all business decisions so that everybody understands what
acceptable behaviour is (and what is not).
 The code sets out the correct and desired behaviour / procedure required for business and by employees in
different situations.
 The code will spell out the consequences of unethical behaviour. This reinforces the concept of accountability in
the business.
 It helps to protect a business if an employee breaches the code. For this reason it is important that everybody is
informed and reminded often about the expectations stipulated in the code.
 The code of ethics will help new employees to understand what acceptable behaviour is and what will not be
tolerated.
 When the business operates in the global arena (international trade and dealings), it helps management and
employees to understand acceptable practice within the organisation, regardless of where in the world the
business operates. This is important, because ethical standards and values may differ between countries (or even
groups of people within a country) and by having a code of ethics it eliminates confusion.
 The code should stipulate what the acceptable behaviour is when conflict of interest arises in the work situation.
 A code of ethics gives the business the opportunity to create a positive image of the business with the public and
in doing so, potentially giving the business a competitive advantage.
 The code of ethics may also be used to guide the business and employees regarding the importance of Corporate
Social Responsibility (CSR).
CONCLUSION
From: xxxx