Business Law And Ethics Commerce Essay

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In today's changing business world, for a business to be successful, profit maximization is not the only objective that needs to be taken into consideration, but, there is certain behaviour expected by a group/organization to which individuals belong. It is therefore difficult for an organization to achieve both objectives of maintaining ethics and maximizing profits at the same time. However, this does not mean that the organization has the right to choose one. This report will be dicussing this below, by looking at different organizations such as Toyota, Green Star Recycling company and Barclays.


Ronald J. Ebert and Ricky W. Griffin (2205, p.37) defined ethics as beliefs about what may be considered as right or wrong, or actions which may be good or bad and may affect others. It encompasses an individual's values and morals within which he behaves in a certain way which may be considered as ethical or unethical according to the society.

2.1Business Ethics

This refers to ethical or unethical behaviour by a manager or an employer of an organization.

2.2 Managerial Ethics

This refers to a set of standards of behaviour set for managers which acts as a yard-stick or a guideline in performing their task.

3. Ethical Behaviour and Unethical Behaviour

Ethical behaviour refers to an individual's beliefs and social norms which are generally considered to be good or right, while unethical behaviour refers to the individual beliefs and norms that society defines as wrong or bad.

4. Profit Maximization

Mark Hirschey (2009, p.9) defines profit as the revenue earned from the sale of goods minus the costs of producing them. Therefore, profit maximization is the process by which companies determine the best output and the best price which will provide maximum return.

There are often conflicts with a business being ethical and maximizing profits at the same time. As discussed by John W. Collins(1994, p.1) business ethics is referred to as an 'oxymoron.' This is because profit maximization is the ultimate goal of a business. However, the expectation of the society becomes a constraint on a n organization's ability to meet its objective of maximizing profits. This will lead to business objectives being ignored if a lot of attention is paid on ethical issues.

5. Ethics and Profit Maximization

However, 'Watkinson (1973) says that a company should behave like a good citizen in business. The law does not (and cannot) contain or prescribe the whole duty of a citizen. A good citizen takes account of the interests of others besides him and tries to exercise an informal and imaginative ethical judgement in deciding what he should or should not do. This, it is suggested, is how companies should behave.'

Therefore businesses and individuals have different views about this. Those that think that ethics and profit cannot go hand in hand may argue against the above statement by stating that what does a 'good citizen' actually mean in terms of an organization, this is because if an organization goes beyond its legal obligations then it may be wasting scarce resources which would be better employed by investing them in the development of the organization or to increase output for maximizing profits. There is a conflict between social obligations and profit maximization; this is because the prime duty of a firm is to produce profits for its shareholders (who are the true owners of a firm). Frequently managers do not consult shareholders properly when they allocate money for the social and community purposes.

However there are some businesses that do support this statement, as they think that many moral obligations are a form of enlightened self-interest for an organization. For example if a firm contributes to improving the environment in which it operates, this may raise the morale of its workers and make it easier to attract good quality labour to live in the area and work for the firm. Pollution of the environment and conservation of resources have become very topical issues, therefore organizations must take account of this or they will be at odds with the community where they operate.

This report will contain examples of one of the leading brands such as Toyota, Barclays and Greenstar recycling company to further evaluate this statement and finally justify my stand.

6. Corporate Responsibility

Subhabrata Bobby Banerjee (2007, p.5), refers to this as the moral obligation placed on an organization to act in a way to protect and improve the interest of the community with which they interact i.e. local, regional, national or international communities.

6.1 Corporate Social Responsibility

This is the notion that corporations have an obligation to groups in the society other than stakeholders and beyond that prescribed by the law. The action must be voluntary to be a socially responsible action.

Organizations, rather than seeing these responsibilities and requirements as constraints, many businesses view them as opportunities to act in such a way as to not only improve society at large but also to enhance corporate image.

In this context, I would like to talk about Barclays Plc, world's most respected bank, which has adhered to the corporate social responsibility as well as profit maximization.

7. Barclays Plc

Barclays is a British-based financial services group, engaged primarily in banking, investment and banking nd investment management. It is one of the largest financial services companies in the world with activities in Europe, the USA, Africa and Asia.

(Rachael Bailey 2006) Barclays believes that they do not separate corporate responsibility activity from their business nor their brand and the reason for this is that the people they target expect the bank to be responsible.

They believe that their stakeholders i.e. customers, regulators and investors are becoming more sensitive to the changing world and this is simply because organizations cannot be divorced from the communities with which they interact. Since they receive inputs from the environment and earn profits from the outputs to the community and they therefore must acknowledge these claims. The current group of stakeholders are very much interested in th social, ethical and environmental issues relating to Barclays.

7.1 Barclays commitment towards ethics and corporate responsibility

(Climate change corporation, June 2008) Barclays belief on corporate conduct and ethics provides a guideline of behaviour and standard of conduct required by them. The minimum standard are set, but more detailed codes of conduct are added according to the specific area where employees work in to meet local laws and regulations.

Barclays believes that maintaining ethics attaches to every branch of the business, i.e. the stratergy, the product development and the way they treat their employees and customers. This is the reason why Barclayss commitment towards ethics is very strong, in all their activities and showing coroprate responsibility is a way of proving the diverse stakeholders that Barclays is sensitive to issues that cause them to make choices about Barclays.

8. Barclays move towards corporate responsibility.


Barclys informs customers about the strategic changes that may occur, which may affect them so as to prepare them.

They provide suitable products and services through appropriate channels

They design their products and services in such a way at to meet customer expectations and anticipate future expectations so as to go on satisfying them profitably.

Barclays clearly defines the roles and responsibilities of the distributor and provider, thus avoiding conflicts of interest which would harm customers and would be seen as unethical.

Continous analysis of information and feedbak takes place in order to identify ares of improvement.

Barclays has adopted to "stringent-risk based measures" which would avoid any fraud taking place durin the transfer of money.

8.2 Employees:

Barclays prevents discrimination of individuals on basis of race, religion, gender, nationality, background.

They respect people from all backgrounds and cultures and view it in a positive way, by thinking that all the individuals have different background and therefore different techniques of carrying out tasks and different ideas being brought together will lead the business to being successful.

They believe in providin employees a fair wage and is considered ethical under societal norms aswel.

Disciplinary action may be taken to prevent in appropriate behaviour, which includes sexual, racial, or any other harassment or bullying.

8.3 Bribary and Corruption:

Bribary is an inducement made by one party to another requiring the other party to do something illegal/unethical. Therefore, Barclays does not entertain any form of personal payment given to employees and if this takes place, the matter is immediatly taken to the senior managent for it to be formally investigated.

8.4 Competition:

Barclays promotes the concept of free market and adheres to the particular laws and regulations. Competition law restricts companies from collaborating with competitors against interest of consumers. For example, submitting false tender, sgreing terms and conditions of a contratc. Barlays therefor makes sure that employees:

Do not enter into agreements which may distort competition

They prevent leakage and discussing of pricing or any other competitive information with competitors which may prevent free competition

8.5 Other activities:

Aquisition of stake in a Absa (South African Bank) provides 40,0000 employees with work in 12 different countries across the continent.

Investing in projects helping the whole community.

9. Conflict between Ethics and Profit Maximization

John Varley(CEO of Barclays) believes that there is no mutually exclusivity or conflict between doing business in an ethical and responsible way and maximizing profits or making money. This is because their main aim is to deliver quality products and services to customers, increase wealth and facilitate economic growth.

10. Toyota

Toyota, which is head quartered in Japan, as the only automobile manufacturer with a score of more than 80-placing it in the top tier of all manufacturers. Toyota is earning the title of the "World's Most Respected Company."

Pekita (9/15/2009) decibes the way Toyota operates. Toyota's 2 main pillars in its strategic plan are ethics and quality. Both are interwined in the culture of the firm and are included in the risk management as a contingency plan ( a plan that can be used when certain activites can be risky for a firm.) Their move toward ethnicity can be proved in many ways and one of the ways is by outlining their five core values:

Toyota believes that team working will contribute to the development of the country regardless of their position.

Avoiding lack of seriousness in work

Showing gratitude and a small thought in deed.

To finish all activities before they are due and promote continuous innovation.

Create a home like atmosphere by being open with other employees and being generous and kind.

The above are the principles that everyone in Toyota takes into consideration and implements three fundamental philosophies i.e. customers come first, employee satisfaction and company stability. Toyota also implements a strategy called "jikotei concietsu" which means a defect-free process i.e. no defective product leaves a production process.

11 Toyota's commitment towards ethics

Toyota is committed to ethics and this can be proven by them developing a corporate ethics committee which consists of members from the vice president level and very experienced individuals. This committee enables members to discuss deliberate issues relating to corporate ethics and risk management.

11.1 The Toyota Way 2001

As mentioned by Yoshimari (2005, pp 447-457) believes that the way to achieve quality assurance and to "spread the Toyota way" is through educating and developing people. For example in 2006, Toyota established a regional global production centre in the United Kingdom, to carry out responding activities in the European and Asia-Pacific regions respectively. This was created as the human resource development institution to increase efficiency and the speed at which technical skills are acquired overseas global production centre trainers with training certificate currently teach different methods in United Kingdom and Thailand.

11.2 Maintaining Diversity

This project was launched by Toyota in 2002, to sow the ways in which they respect diversity of values and ideas amongst employees. Providing greater opportunities for women, disabled people and senior citizens to work and Toyota believes that employing such people will lead to exchange of different innovative ideas

For women, it is a great opportunity for them to grow and will enable them to facilitate both work and home responsibilities and will provide them with an opportunity to develop their careers.

Promoting employment of disabled people which makes them feel comfortable within an environment. This shows their concern towards equal opportunities and fair treatment which is necessary for them to be a good corporate citizen

11.3 Health and Safety of Employees

This is placed first according to Toyota when it comes to maintaining and developing employees, and they place it first beginning from the senior management to the lower operational or junior levels of management. Create a lively and friendly workplace environment which enhances good physical and mental health, and will enable workers to concentrate more on the continuous improvement of products and will enable them to be motivated towards work and be more innovative.

12. Toyota's Respect For People

This is part of the Toyota Way, where by the phrase "Respect for people" means customers and also includes local communities, Toyota's employees, shareholders, suppliers. Toyota values all its stakeholders and strives to meet the expectation of people in every part of the world to be a good corporate citizen.

JP Womack (Feb, 2008) mentions that respect for people consists of 5 main pillars which include:

Kaizen: This refers to the continuous improvement of products. Toyota recognized employees as their strength and believed that providing employees with education and training will result to continuous improvement as skills will increase, increased innovation of ideas which will lead to better products being produced. Toyota also believes in standardized work in Kaizen. Therefore work must be standardized before Kaizen can be implemented.


Genchi Genbutsu (go and see)



Toyota looks at this in a wider perspective by comprising stakeholders, corporate policies, business processes, leadership behaviours and strategies. It basically aims to keep mutually respectful and balanced relationships with its key stakeholders.

13. Toyota As A Good Corporate Citizen

Michael Mathews (June 3o, 2006) Toyota's incredible success can be reflected due to many factors and one of the major one is that it respects and involves different cultures and communities which assist in marketing its products and promote exchange of ideas which enhances innovation.

Toyota's differentiated strategies have contributed to an effective and efficient business model

Large investments in manufacturing operations which contribute to increased profits

Team oriented firm, which creates a sense of belonging within individuals and enhances exchange of ideas

Kaizen- continuous improvement

New product development systems- Toyota has developed a "community of scientists" among the engineering staff which continuously come up with new ideas, where knowledge and technical expertise drive decision making.

Research and Development- there are two areas where this is carried out i.e. it can be carried out in different business divisions or the centre of research and development.

14. Toyota's relations with customers

Toyota has a policy of "customers first" and they therefore develop, innovative, high quality and safe products and services that meet wide variety of consumer needs

15. Toyota's relations with shareholders

Shareholders can be referred to as the owners of the organization and therefore they have a right on the profits of the organization and therefore Toyota believes improving its value will not only be a benefit for shareholders but will also lead to an increase in trust that shareholders have on the company.

Toyota considers the timely disclosure of their financial results as this will assist them in making future investment decisions and to do this more effectively, Toyota has developed a Disclosure committee.