Summary of the unit:
Business Ethics is a key component; in fact, it could be the very bases of the way in which operational activities are carried out within a business. Ethics are to do with what is ‘right’ and ‘wrong’. It is about how a company does its business and how its activities affect all of its stakeholders. A business is part of society and therefore is required to maintain a certain standard of behaviour.
TASK 1: Assessment 1 – A Study of a Selected Company
Using an organisation of your choice but in discussion with your tutor, research the ethical values and activities of the company. Explore ethical issues relevant to the company’s progress, identify stakeholders and conflicts of interest and assess the ethical implications for stakeholders. Finally, explore the social implications of business ethics for the company.
Ethics refers to the moral rights and wrongs of any decision a business makes. It is a value judgement that may differ in importance and meaning between different individuals. Businesses may adopt ethical policies because they believe in them or they believe that by showing they are ethical; they improve their sales.
Background of the organisation or company:
Ryanair is Ltd which means the liability of members or subscribers of the company is limited to what they have invested into the company. Ryanair is an Irish low cost airline, which is located on the grounds of Dublin Airport, with its primary operational base at London Stansted Airport. The airline operates over 300 Boeing 737-800 aircraft and has been characterised by rapid expansion and it’s low-cost. The route network serves 30 countries both in Europe and North Africa.
Explain the ethical values and activities of the company:
(Areas of ethical activities include: ethics in finance, eg bribery, executive pay, insider trading, lobbying; ethics in human resource management, eg discrimination, worker surveillance; ethics in production, eg animal testing, genetically modified (GM) foodstuffs, planned obsolescence; ethics in sales and marketing, eg spamming, shills, product placement, green washing; ethics in intellectual property eg software piracy, counterfeiting, peer-to-peer file sharing)
Ryanair have made it very hard to find their mission statement, but on the basis of their main objective one can see that Ryanair wants to be the low-cost airline. In my opinion, based on different information I have read during research I believe Ryanair will do just about anything to maintain that low-cost airline status. Ryanair are cutting the costs in which they spend by reducing fuel, re-styling their inflight magazine from A4 to A5 and doubling it up as a menu. The airline has also been accused of environmental effects which are imputing to the speed up of Global Warming due to the emissions which the planes are releasing. In a conference to discuss corporate strategies, Michael O’Leary (CEO) says, “It’s the oldest, simplest formula; Pile ‘ em high and sell ‘ em cheapâ€¦ We want to be the ‘Wal-Mart’ of the airline business. Nobody will beat us on price EVER.” Ryanair inform their stakeholders about what they believe, is ethical behaviour in the Chairman’s report as part of the Annual Report. However, they do not mention how they will improve occurring problems. “Notwithstanding the issues we face, the outstanding people at Ryanair continue to work hard on behalf of shareholders to reduce our costs while at the same time delivering the lowest fares in Europe to our 79 million passengers.”
Explain the ethical issues relevant to the company’s progress.
(These include corporate governance; corporate social responsibility; environment; sustainability; human rights; corruption; trading fairly; legal and regulatory compliance; business practices; working conditions; individual ethical responsibilities):
Business ethics considers actions taken on behalf of organisations such as Ryanair. Business ethics asks the business if its actions are good or bad for us humans. Many questions that arise in business ethics affect all of us such as the environmental ones. There are also some issues which relate to human rights too. Therefore, it is important that Ryanair deals with these issues and questions correctly as they do affect humans and the environment. Human rights are mainly about discrimination. For example, it is illegal in the UK to treat people differently because of their race, gender, religion, sexual orientation or disability. These are known as basic human rights.
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There are other types of human rights which are built into legal system. At Ryanair, employees are entitled to a contract of employment, to work part time, to be able to join a union and to have hearing against wrongful dismissal. This is for everyone; this is known as human rights. Ryanair would have to follow human rights when employing people to work with them; they cannot deny someone to work for them because of their race, gender, religion or disability. If these laws are broken in Ryanair they can be sued. Ryanair’s commitment to operating with respect for human rights is reflected in company policies and procedures. In order to integrate human rights considerations into the management of their business, human rights due diligence is part of their risk assessment for new production and sales markets. For existing production and sales markets, Ryanair will regularly evaluate human rights related risks and conduct human rights impact assessments on high risk markets. Risk and impact assessments are used for them to identifying actual and potential human rights impacts from their business activities, which are then managed by the relevant business functions. Ryanair works broadly to promote respect for human rights through public policy, stakeholders’ dialogues and collaborations.
When people start working for a business organisation, they are entitled to a set of minimum working conditions, which are not just about wages and salaries. They also cover aspects of work such as hours, holiday entitlement, privacy harassment and discrimination. It is up to employers to create working conditions that are fair, just and open. Trade Unions have the traditional role of defending worker rights against bad employers. Ryanair’s employees must have been told about the working conditions which should cover all aspects such as things like hours, holidays, salaries and wages. It is up to the employer to create the working conditions, if something is unfair there are Trade Unions who have the role to defend workers from the bad employers. The employees shall be granted and correctly compensated for any types of paid leave to which they are legally entitled. For Example, leaves include annual leave, maternity/parental leave and sick leave.
Ryanair’s employee should be treated with respect and dignity. Under no circumstances Ryanair either accept the use by their suppliers, their subcontractors or other business partners of humiliating or corporal punishment, and no employee shall be subject to physical, sexual, Psychological or verbal harassment or abuse. Wages must be paid regularly, on time, and must reflect the experience, qualifications and performance of the employee. Ryanair’s minimum requirement is that employers shall pay at least the statutory minimum wage, the prevailing industry wage or the wage negotiated in a collective agreement, whichever is higher. All other types of legally mandated benefits and compensations shall be paid. No unfair deductions are allowed, and the employee has the right to a written specification of how the wage has been calculated.
Ryanair have board of directors who make important decisions. They are answerable to board managers. Governance is important to large businesses like Ryanair. it is important because how will H&M directors know what mangers are doing. Therefore the government gets involved. Also corporate governance is the people and procedures for taking a major decision within Ryanair. Ryanair will have to send directors progress about the business so they are always updated, the managers at Ryanair will be responsible for consulting the board directors about everything that goes on in the business on a regular basis. Governance is vital to big companies such as Ryanair because how will Ryanair directors acknowledge what managers are doing, this government will step in. Corporate governance is the employees and measures for taking important decisions within Ryanair.
Fair trade is where:
- Business is carried on in an open manner.
- Competition takes place on grounds that are equal for all parties
- Consumers can feel secure that the goods and services they are buying are going to be of satisfactory quality.
Ryanair must make sure that they are always trading fairly and they’re consumers should always feel secure that goods and services they are using are going to be of satisfactory quality.
Ryanair agree that wages in some production countries are too low. Ensuring that all textile workers should be able to live on their wages has always been Ryanair s vision, and this is also stated in our Code of Conduct. In November 2013, Ryanair had developed a new roadmap based on their vision, a fair living wage covering workers basic needs should be paid by all H&M commercial goods suppliers. One important element of this is that Ryanair ‘s while another states that this requirement is based on a skilled workforce who’s wages are negotiated and reviewed annually, involving democratically elected trade unions of worker representatives.
Identify stakeholders of the organisation and conflicts of interest and assess the ethical implications for stakeholders.
(Stakeholders – owners, employees, customers, suppliers, competitors, citizens, etc. Conflicts of interest between stakeholder groups e.g. shareholders versus environmentalists)
Ryanair‘s Main Stakeholders include:
– Business Partners
Conflicts of interest – Ryanair Stakeholders:
Employees Vs Owners
Employees want higher wages and owners want high profits therefore want to pay employees lower wages.
Customers Vs Shareholders
Low prices is what customers want, but higher prices is what shareholders want as it means higher profits.
Employees Vs Management
Conflict might occur when management desire to cut costs to boost profit in order to satisfy their own needs as well as different stakeholders as employees want higher wages.
Stakeholders are a person, group or organisation that has interest or concern in an organisation. Stakeholders can affect or be affected by the organisation’s actions, objectives and policies. The below diagram includes definitions for each stakeholder:
Ryanair’s main stakeholders are:
- Employees – who seek the necessary training along with career development opportunities within Ryanair. They also want job security.
- Shareholders – who want a dividend from profits.
- Customers – who want services that meet their needs when flying. They wish for flights that are at low prices and convenient dates and times.
Explain the social implications of business ethics for the organisation or company.
(Implications include – adapting business behaviour; responding to ethical pressures; implementing ethical practices; influence of stakeholders and pressure groups; impact on competitiveness; reputation; public image; ethical trade; value-added; complying with relevant legislation and codes of practice, e.g. UK law, EU law;UN Declaration on Human Rights; UN Global Compact; economic activity e.g. location)
(Other Implications include: global, eg environment; corporate, eg legal and regulatory compliance, policies and practices; individual (employee, consumer)
Ethical Concerns and Solutions
Ryanair is a business that is acting unethically in many ways. I have included the reasons which I think are the main ones.
The emissions, which are coming from the aircraft, are believed to be having a very bad effect on the Earth’s atmosphere which is causing harm which leads to Global Warming, this will have an effect on everyone if Ryanair doesn’t stop right now. This is evidence that the business is acting unethically as they are not caring for the environment in which we are all living in.
An example of the way in which Ryanair is acting unethically in relation to employment practice which became known when former employee Sophie Growcoot got in contact with her local representative to reveal the details of her employment contract with the company Crewlink, which acts as a contractor for Ryanair. The Independent later published the story. Growcoot explains that Crewlink forced her to take three months of compulsory unpaid leave a year during the winter months, air traffic is slower therefore Ryanair require less staff. Not only is a compulsory unpaid leave bad enough, the contract forbids her from taking additional employment yet provided no compensation during that period of leave. She also criticized Ryanair for making her pay for her uniform and for required safety courses. Growcoot then explains further to all of that they only paid her for the hours she was “in the air”, which didn’t include any turnaround time between flights, meetings, time on ground resulting from cancellations or delays and pre-flight briefings. However due to this claims Ryanair have not denied them but expressed that she was employed by Crewlink and not them therefore they hold no responsibility for any of this accusations.
Health and Safety
The action in which Ryanair is carrying out which leads me to believe that they are an unethical business is that they are putting their passengers and staff at risk by restricting the amount of fuel they carry in an attempt to cut costs. In a recent article published by The Independent, the airline has been accused of not putting extra fuel into their tasks, which would be used due to any delays. The article includes an example of this which has recently happened, a Ryanair flight has to make to attempts to land then make a pit stop as they had not filled the tank fully included extra fuel in which they needed. However, this is not a legal problem as they fill the tank to the amount by law. They have the amount issues by law, but are driving slower in order to use up less this means they are adding time on to journeys.
With these issues and more creating black clouds over the business which is making them act unethically, Ryanair needs to consider ways in which they could deal with the occurring issues if of course they can actually deal with them.
The fact is that Ryanair is faced with unethical issues including, environmental, social and safety ones. In order to start acting more ethically the airline seriously needs to overcome the occurring problems, for the three issues I have explained above I am going to suggest ways in which they can change unethical to ethical.
Problem – The emissions from Ryanair aircrafts are having bad effects on our environment.
Solution – In order for the emissions released to not affect our environment Ryanair should look into exactly how much is being released and consider changing what they use that makes the emissions have such a bad effect. Ryanair needs to go green like Virgin America and Air France, which are the two airlines that were awarded the “most eco-friendly”.
Practicality – If other airlines that are highly recognised and extremely successful can go green and be environmentally friendly then why can’t Ryanair. In order for this solution to be successful the airline need to invest more time and money into biofuel, recycling etc. as in the long run this is the better option for everyone.
Problem – Ryanair’s contractor Crewlink has been drawing up harsh contracts for staff of Ryanair.
Solution – Crewlink are working for Ryanair, yet its Ryanair that get the blame for all the disasters like in Sophie Growcoots story. Ryanair cannot deny its happening as they know it is, but to stop it and act ethically towards their employees, they need to change the way in which the contracts are being drawn. If Crewlink are the ones who are responsible Ryanair should disconnect from them and treat their employees with fair advantages rather than unfair disadvantages.
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Possible vs. Practicality – To change the way in which the contracts are drawn is hard as Crewlink are a company as well (even though they are working for Ryanair) they might go against Ryanair’s wishes. To me the most practical thing to do in this situation is to drop Crewlink all together and start employing people straight through Ryanair that way if anything does happen Ryanair has all the documents to fight against claims because at the moment they have no evidence. However, this may increase costs, which would make shareholders unhappy.
Problem – In attempt to cut costs Ryanair is reducing the amount of fuel brought on a journey right down to the amount needed by law. This means no emergency extra.
Solution – The solution to this is obvious. Bring extra. Even though fuel is expensive wouldn’t Ryanair rather pay for that then is the cause of passengers and staffs deaths if an unfortunate incident occurs?
Possible vs. Practicality – This is without a doubt something Ryanair should stop doing it is unsafe to all. If they continue they may end up spending more and getting into more trouble therefore losing customers and loosing profit. This is so important that shareholders would be willing to have lower dividends for a while.
Impacts of Acting Ethically
Even though acting ethically is a good thing, Ryanair have been unethical for a long time and with the change there is bound to be some impact on the business and its stakeholders. If the business was to carry out the solutions I have suggested they will encounter long-term and short-term advantages and disadvantages. In making the ethical decision to stop reducing fuel in order to cut costs would mean that the business would need to invest more money therefore in the short-term no one would be the winners as the shareholders might not get as much money back as they invested. However, in the long-term, as by carrying out this particular solution, customers may view Ryanair as safer and trust worthier, the business profits may increase therefore the Ryanair will be a good investment once more.
If the business were to cut off Crewlink and have an in-house recruitment, Ryanair may save money, as they would no longer need to pay Crewlink for their services. This would be an advantage for the business for two reasons, they would be able to control everything and stay out of trouble caused by linked companies and they would cut costs in a safer way.
For the last solution it is a win/win situation for all involved, the business and stakeholders. By being more environmentally friendly Ryanair will attract more customers as they will still be able to keep their low-cost scheduled flights just in an ego way. In my judgment I think Ryanair would be crazy not to carry out these changes, they will be beneficial to everyone in many ways. As a business Ryanair will be able to maintain its low-cost reputation but just do it will more certainty, yes in the short-term it may be a lose but it will be a win for all in the long-term.
Assignment 2: Ethical Concerns in the Community of the Selected Company- P3, P4, P2.Research the ethical concerns of different communities in which a selected business operates and write a full report for submission.
Ethics are the set of moral principles that guide a person’s behavior. These morals are shaped by social norms, cultural practices, and religious influences. Ethics reflect beliefs about what is right, what is wrong, what is just, what is unjust, what is good, and what is bad in terms of human behavior. They serve as a compass to direct how people should behave toward each other, understand and fulfil their obligations to society, and live their lives.
Define Business Ethics:
”Business ethics are the study of proper business policies and practices regarding potentially controversial issues, such as corporate governance, insider trading, bribery, discrimination, corporate social responsibility and fiduciary responsibilities. Business ethics are often guided by law, while other times provide a basic framework that businesses may choose to follow in order to gain public acceptance.”
Mention your selected business and give historical background
Apple Inc. is an American multinational corporation that designs and manufactures consumer electronics and computer software products. The company’s best-known hardware products include Macintosh computers, the iPod and the iPhone. Apple software includes the Mac OS X operating system, the iTunes media browser, the iLife suite of multimedia and creativity software, the iWork suite of productivity software, Final Cut Studio, a suite of professional audio and film-industry software products, and Logic Studio, a suite of audio tools. The company operates more than 250 retail stores in nine countries and an online store where hardware and software products are sold.
Established in Cupertino, California on April 1, 1976 and incorporated January 3, 1977,the company was called Apple Computer, Inc. for its first 30 years, but dropped the word “Computer” on January 9, 2007 to reflect the company’s ongoing expansion into the consumer electronics market in addition to its traditional focus on personal computers. Apple has about 35,000 employees worldwide and had worldwide annual sales of US$32.48 billion in its fiscal year ending September 29, 2008.For reasons as various as its philosophy of comprehensive aesthetic design to its distinctive advertising campaigns, Apple has established a unique reputation in the consumer electronics industry. This includes a customer base that is devoted to the company and its brand, particularly in the United States. Fortune magazine named Apple the most admired company in the United States in 2008 and in the world in 2009.
Here I will be using my selected business ‘Apple’, to describe the ethical concerns facing specific communities as a result of their activities.
Explain the ethical concerns of different communities in which a selected business operates: (DifferentCommunities include: local; regional; national; global; pressure groups, eg Greenpeace, Friends of the Earth;
impact of overseeing bodies, eg UK Government, United Nations, European Union, World Trade Organization (WTO), World Health Organization (WHO)
(Ethical Concerns include: corporate social responsibility; globalisation; cultural imperialism; ecology; environment; fair trade;corruption; child labour; outsourcing; personal attitudes; whistle blowing)
Apple, whose main manufacture in China is Foxconn, had to face ethical concerns in China recently.
The ethical concerns facing the local community are Environmental and Child Labor. The environment is impacting the local community because the business is having an increase in the level of pollution in the city which is of course having a negative effect on the environment. Child Labor is another ethical concern that Foxconn have to face as they are employing under age children which is affecting the local community as they are not getting the opportunity to be educated instead they are having to work in factories.
Regional and National Community
The ethical concern facing the Regional and National Community beyond China is mostly to do with the Environment. The factories in China in which Foxconn own to manufacture the supplies for Apple create and let off a lot of pollution which is spreading across the seas into H.K and Taiwan. This is then impacting the environment second hand in another community. A business can also be affected by acting unethically in one community but having it pass on to the next through media. Once a community see’s what the business is doing in another community they may be less willing to engage with that particular business, this creates a bad reputation for the business.
Environmental pressure groups consistently force issues into the public’s attention and therefore pressure both governments and business leaders into action. In terms of Child Labor, U.N.I.C.E.F is a pressure group that stands up for children’s rights. Along with promoting the importance of education for children living in communities where work seems like the only option U.N.I.C.E.F will fund the education. The roles that pressure groups such as U.N.I.C.E.F play in encouraging these businesses to act ethically is extremely vital and so important as without them the businesses would just do whatever is easiest.
Overseeing bodies such as the World Trade Organisation (WTO) and Governments are needed to deal with these ethical questions that concern us about our businesses. National, Continental and International bodies are taking all sorts of action to monitor the activities of business around the world.
Examples of these overseeing bodies are:
- UK Government
- United Nations (UN)
- European Union (EU)
- World Trade Organisation (WTO)
- World Health Organisation (WHO)
Concerns of Communities
Here I will be taking the issues mentioned above and explaining how businesses could improve their corporate social responsibility. In terms of the Environment and Child Labor concerning the community due to unethical behaviour from Foxconn and Apple there are ways they could eliminate these.
The environment is not just having an effect in one community but is traveling on and having a second hand effect on neighbouring communities – much like the ‘second hand smoking effect’ only this is second hand pollution.
Due to the business acting unethically and producing masses amounts of pollution from Foxconn factories manufacturing Apple products the environment is having a beating. This is effecting the rise of global warming aiding it to go faster. The mining of the raw materials is also impacting our environment badly as they are not going about it the correct way.
Ways in which Apple can eliminate these unethical environmental concerns is by hiring another company to manufacture their products, although this may mean they need to spend more as one company may be more expensive than another. However, by doing so Apple will no longer be seen as acting unethically as they will not be associated with an unethically partnering company.
Foxconn however can eliminate these unethical environmental concerns but it will take more than one step. They need to consider ways in which they can produce what they are producing but ethically. For example, they can start by sourcing the raw material in an ethical way such as mining in areas that are specifically designed to be mined in and recycling the waste materials they do not use.
Child Labouring is a horribly unethical thing to be associated with and both Foxconn and Apple should be very ashamed of themselves.
Due to the hiring of underage children to work in factories manufacturing Apple products both Foxconn and Apple are guilty of this unethical act that is a concern the business needs to face.
Apple once again can eliminate this problem quite easily, they can drop Foxconn and find another company to manufacture their products, hopefully a company that doesn’t use Child Labour. Again this might cost them more but they should consider whether it is worth saving their money of a child’s rights.
For Foxconn is little tougher to eliminate this problem as it a reputation they will always carry, however Child Labouring only occurs in certain communities where education is limited for children so working is really their only option. Foxconn can spend more money and open a factory to manufacture the products in another community or country (if needed) so that they can’t be exposed to the Child Labouring temptations.
The Environment and Child Labor concerning the community due to unethical behaviour from Foxconn and Apple can be prevented by considering and acting upon the suggestions I have made above but there are many more unethical concerns facing these businesses and those also need to be sorted before the business is somewhat considered ethical.
Here I will be describing the social implications of business ethics facing “Apple” in its different areas of activity:
Apple has been acting unethically and we can see from this report in the Guardian, Apple has been known to use child labour.
The business ethics issues that I believe effect society as a whole are ethics in Finance, Human Resource Management and Sales and Marketing.
Ethics in finance relates to issues like bribery, executive pay, insider trading and lobbying and it is a concern to society because it involves all sorts of illegal corruption. Ethics in human resource management includes discrimination, worker surveillance and is a concern to society because it is about the rights of society and employees of the business. Ethics in sales and marketing for example, spamming, shills, product placement, green washing are concerns to society because it is just a way of generating sales and can end up having a baggage pile on society.
The implications of these issues for the business are different for each issue. For ethics in finance the business can face legal and regulatory concerns if they are caught demonstrating insider trading. The business is currently keeping a close eye on the stock exchange activity within the business to make sure no one is taking advantage of it. For ethics in sales and marketing faces a potential bad reaction from customers if they keep green washing their products in marketing. Currently the business is doing nothing to address this. As for the child labor Apple face legal concerns as it is against the law. According to the report Apple let the children go and pay for their education in a school of their family’s choice.
Judging the Impacts
For this I will be focusing on the issue of Apple’s Child Labour use.
Apple might deal with the issue of Child Labour by eliminating the problem and sticking to their code
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