Study On Business Ethics Responsibility Commerce Essay

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"Unethical behaviour in business is not just a recent phenomenon (16 century BC, the philosopher)" (Poirier)

This line by Poirier, not only explains the irresponsibility of the companies towards the environment, however they are also in the accord of their behaviour towards their own stakeholder's.

This ethical and unethical behaviour's are not unusual, as they were practiced in the industries since very long.

"Civilization and profit go hand in hand" (Coolidge).As said by Coolidge also, that more than in any other field of human endeavour, role of business success is quantified in terms of a single outcome-profit whereas the role of successful ethical norms deal with the complex matters of moral behaviour's being adopted by the individuals working in the industries.

In promoting the ethical norms and decisions for our future both ethics and civilization are the key factors in making the transformation feasible and all-together they can help the world economies, social cultures of today and tomorrow.

Acc to Elkington and burke (1987) also, in today's world, environment is been entirely ignored by many multinational companies for making profits. Companies take the path of Unethical business to earn more and more profits by simply neglecting the social welfare (Socialism).

Society and environment both are ignored in the business field to earn more and more profits and to build supreme positions among opponents, the motive being bringing the company and self on the top.

Although the businesses need to follow the obligations, in order to protect the environment laws along with mutual cooperation and interaction with the governments, establishing environment regulations, however they fail to do so. The business as a result fails to develop and demonstrate an environmental moral leadership (Hoffman, 1991)

"Good ethics is good business (W. Michael Hoffman) as a basic for such business moral leadership in both the business and environment ethics movement. Caution against the moral shallowness inherent in the position or in the promotional strategy of ecological homocentric which claims that society, including business, ought to protect the environment solely because of harm done to human being a human interests".   (W. Michael Hoffman, 1991)

The social welfare is not considered by the modern companies in businesses. Acc to Hoffmann (1991) also the care has to be taken from the managerial decision making process. The policies, regulations, deregulations, government inabilities to control the situations cause the damaging effects on the society as a whole.

"For the First time in the history of the world, every human being is now subjected to contact with dangerous chemicals, from the moment of conception till death. In the less than two decades of their use , the synthetic pesticides have been so thoroughly distributed throughout the animate and inanimate world that they occur virtually everywhere. They have been recovered from most of the major/rivers system' s and even from the streams of groundwater flowing unseen through the earth. Residues of these chemicals linger in the soil to which they may have been applied a dozen years before. They have entered and lodged in the bodies of fish, birds, reptiles, and domestic and wild animals so universally that scientist carrying on animal experiments find it almost impossible to locate subjects free from such contamination. They have been found in fish in remote mountain lakes, in earthworms burrowing in soil, in the eggs of birds- and in man itself. For these chemicals are stored in the vast majority of human beings, regardless of age. They occur in the mother's milk, and probably in the tissues of the unborn child". (Carson, 1965:31)

As Carson (1965) argues that the implacable impact on human beings and environments are being deliberately performed by our own actions so we should be aware of the results about the future also. The actual demand and need is radical reformations within our actions and thoughts which is an indispensable need of today's world. On the other hand (Tokars, 1987) has said that these reformist efforts would be very slight steps to prevent the collapse of world economies as they are bound to happen in the future.

Acc to Carson (1965), firstly the steps are critical as the results we are facing today are just the minor glimpse of tomorrow's future. The piece-meal approach has to be abandoned immediately and the radical reforms have to be adopted using the 'eco-friendly' codes of conduct and legislations.

Engineers in the industries work developing economical and safe solutions to practical problems, by applying mathematical and scientific knowledge while considering technical constraints. The term is derived from the Latin root "ingenium," meaning "cleverness".

The industrial revolution and the continuing technological developments of the last few centuries have changed the connotations of the terms slightly, resulting in the perception of engineers as applied scientists. Same in the lubricant Industries also, In order to invest less in Research and development, the role of engineers is transformed.

The work of engineers is the link between perceived needs of society and commercial applications. An engineer principally applies the principles of science and mathematics to develop economical solutions to technical problems. Their work is the link between scientific discoveries and the commercial applications that meet societal and consumer needs.

Senior Engineers faces various ethical issues within the firms; still they have to neglect them due to the culture being promoted within the industry which is basically profit motivated culture.

Sam, basically a senior engineer in the ABC firm, is assigned a marketing role to promote the products. ABC firm is a major lubricant manufacturer in the industry.

While working with ABC, Sam has to face some ethical issues such as cheap products (raw-material) being used in manufacturing, problems of waste disposal in both ends (company and consumer), less wealth being invested on Research and development, and mall adjustment being done with the accounts.

When Sam, identifies the problem, he communicates the same with Varun (Marketing Manager). During the conversation with Varun, he is informed about cost involved and profit margins.

Such acknowledgement disappoints Sam, as he learns that similar issues, being most common and still neglected within the industry. Every individual faces the same dilemma everyday however due to lack of knowledge; it becomes difficult for whistle blowing to stand against such actions.

Companies follow unethical business due to the reasons such as profits, additional customer's, maintaining status in the business, global growth of company, attracting more shareholders etc.

Independent Lubricant Manufacturing Associations (attached) has directed the Principles of Ethics which are mandatory to be applied by organisations for conducting ethical businesses in the lubricant industry; however they are constantly being ignored due to sheer personal interest:

(A)

"Protect and enhance the environment and the health and safety of their employees, their customers' employees, and consumers through the safe and responsible use and disposal of potentially hazardous substances"

Code Of Ethics: Independent Lubricant Manufacturer Association Adopted April 12, 1984, Amended April 30, 1994 and April 2, 2005. (Refer to appendix 1)

Firstly, in this cut-short competition, where more companies are emerging in lubricant industry. There is a lack of knowledge about corporate social responsibility. The committed actions committed are dangerous in terms of the social consequences (Utilitarianism), resulting unethical both in terms of environment as well for the stakeholders.

A lubricant contains additives which are highly toxic for environment (both for flora and fauna).Correct handling and disposal is a major concern in lubricant industry.

Occasionally, the unused lubricants requires disposal. The best course of action in such situations is to return it to the respective manufacturers, where it can be processed as a part of fresh batches. In today's world companies completely ignores the aspect of product service systems, which further act as a way that majorly impact the environment (Mont, 2004)

It is estimated that 40% of all lubricants are released into the environment by disposal through recycling, burning, landfill and water pollution, on the other hand, there are strict regulations in most developed countries regarding disposal in landfill and discharge into water as they understand that even small amount of lubricant can contaminate a large amount of water.

(B)

"Adhere to a standard of excellence in manufacturing, blending, producing, packaging, promoting, and marketing;"

Code Of Ethics: Independent Lubricant Manufacturer Association Adopted April 12, 1984, Amended April 30, 1994 and April 2, 2005. (Refer to appendix 1)

Secondly, cheap raw material is being used by the lubricant industries to manufacture more in less price and selling it further with maximum profit.

There stands a great demand for such lubricants as they are priced low from their competitors; however they are not worth on the same. This relates to deception being done by the lubricant industries.

These acts of deceptions are done when marketing communication either creates, or takes advantages of, a false belief that substantially interferes with the ability of people to make rational consumer choices (Boat Right, 2000:288).

 

This cheap raw material provides maximum profit to the company, and on the other hand it affects the environment appallingly. Due to the short term assessment of earning profits, the consumers also ignores and purchases them.

The biggest threat remains to the environment specially from the old conventional industries , where the release of toxic pollutants, greenhouse gasses, abundant litter, biodegradable and non-biodegradable landfill is being trashed into the open surroundings and oceans. Old conventional industries, adds more damages to the environment due to the old methods and techniques.

Cheap raw material is a real threat for an eco-friendly environment. Lubricant industries are supplying those products which are completely non -degradable, generating various types of pollution such as air pollution, water pollution, land pollution.

(C)

"Monitor technological developments to assure availability of the highest quality product and the imposition of the most stringent standards within the lubricants industry".

Code Of Ethics: Independent Lubricant Manufacturer Association Adopted April 12, 1984, Amended April 30, 1994 and April 2, 2005. (Refer to appendix 1)

Thirdly due to this idea of gaining more profit companies contribute less money on the research and development programs. Companies are also afraid of the losses from R&D while manufacturing and experimenting the new products.

(D)

"Maintain and service all accounts efficiently and professionally".

Code Of Ethics: Independent Lubricant Manufacturer Association Adopted April 12, 1984, Amended April 30, 1994 and April 2, 2005. (Refer to appendix 1)

Lastly, the balance sheet also known as a "statement of financial position", which reveals the company's assets, liabilities, and owners equity(net worth). The balance sheet, together with the income statement and net cash flow statement, composes the cornerstone of any company's financial statements.

Lubricant Industries also performs mall adjustments in the balance to attract shareholders. As the shareholder money is the main motive, industries manipulate to make profits from their investments.

Shareholders and individual investor who purchase stock or bond keeps in mind that balance sheet is consciously made by the company with respect to profits and the basis for lot more profit in the respective future.

The main motto is to have more shareholders to gain more profit for the growth of the companies.

Companies perform different function for different stakeholders. A "Stakeholder" is a person or organization that has a legitimate interest in a project.

A narrow mapping of a company's stakeholders might identify the following stakeholders:

Employees

Communities

Shareholders

Government

Customers etc

Employee:

Employees perform the discrete activity of economic production. Employee refers to a specific defined relationship between an individual and a corporation. Employees constantly work's for providing profit and for the global growth of the company. The objective of the employee gets transformed due to the culture, to earn profits and they do so by the harassment of customer's needs.

Community:

"Community is a body of people having common rights, privileges, or interests, or living in the same place under the same laws and regulations" (Brainy Quote)

It's an incorporated association, group of economic enterprises, or professional associations at a small, national or international scale. Business companies follow or join certain type of communities to follow ethical business .But in cut-short competition, while making the profit companies ignores the rules of the communities and supports growth of unethical businesses and this ignorance of rules lead to bad impression on the society.

The argument is being confirmed by the case of leakage of forty tons of Methyl cyanide (MIC), a lethal chemical used in pesticide production , by a Union carbide (U.S Based Chemical Industry) Plant in Bhopal, India (Trevino and Nelson , 1995).

The parental company operated the plant allowing a foreign facility to operate with careless controls and poor links to the mother corporation.

A U.S based chemical industry due to sheer negligence, significantly damaged not only the people, however animals also. Generation to generation, the genetic defects were carried as a disastrous effect of the debacle.

Shareholders:

A mutual shareholder or stockholder is the " one who owns shares of stock in a corporation or mutual fund. For corporations, along with the ownership comes a right to declared dividends and the right to vote on certain company matters, including the board of directors also called stockholder" (Investor Words)

All the mall adjustments in the balance sheet are done to represent increased profits by the company to attract share holders. Due to the same reason, the shareholders invest more money to gain more profits.

Government:

AGovernment is a body of people that sets and administers public policy, and exercises executive, political, and sovereign power through customs, institutions, and laws within a state. (Business Directory)

With the fake accounts and wrong businesses techniques, the license to manufacture and sale of lubricant is taken from the government by the lubricant industries. This unethical business leads to polluted environment for the society.

Customer

A customer is an entity that receives or consumes products (goods or services) and has the ability to choose between different products and suppliers. (Business Directory)

Ethical business surrounds the vision of customer needs and benefit analysis, however now industries aims only to gain more and more profit by using cheap raw material and cost of the final products, with maximum amount of profit.

Industries are aware of the harmful impacts on environment and society, still they constantly practices the same functions to gain growth and profitable businesses.

The above subject can be evaluated by using various ethical theories and concepts:

Corporate Accountability: The concept of Corporate Accountability -the firm as a political actor (Crane et al, 2007), it's based on the premise that organizations should be answerable for their actions (Crane et al, 2007). Industries like lubricant industries are currently proving threats to the survival of mankind and its natural environment. (Beck, 1992).

It's perhaps understandable that the actions are accountable; however it's the moral responsibility of the firms also, to be firstly accountable to themselves of their actions. Conducting self analysis and questioning the beliefs and practices would be unleashing subversive potential of business ethics (Baumann, 1993)

Acc to Crane et al, (2007) also, the manufactured products are based on trust, and value proposed according to price which is completely deluded by manufactures by being non-responsible and non-accountable towards society and environment. Even the action of mall adjustments makes an entity completely Unaccountable for its stakeholders also.

As Friedman (1970) said that the corporations are only accountable to their shareholders, and furthermore accountable to the countries where they operate, however Beck and Giddens (1986) laid the basis of a completely new view of modern industries and their harmful impacts on society confirming their role in damaging the environment.

Consequentialist theories refers to those moral theories which hold that the consequences of a particular action form the basis for any valid moral judgment about that action. It focuses on intended outcomes, the aims, or the goals of the certain action. (Crane et al, 2007)

Manipulation of mall balance sheet is completely Un-ethical. Due to the moral justice it fails to do so, as the focus is on the collective welfare only.

Ethical Egoism: The controversial theory of Egoism (Duska et al, 2003) is applicable on lubricant industries as the managers in need to achieve the sales growth and profit maximization, undertakes unethical behaviours such as deception and ignorance towards disposal.

Egotism also refer to the self interest of the firm and ignoring the interest of customer with led to the unethical behaviour in business which is completely non justifiable on all concerns.

Adam Smith (1793) also argued that the self-interest of individuals in the economic system is acceptable as the end product of a system would be a morally desirable outcome for the society, as they may suffer in short term, however in longer run they will be benefitted.

Deception: an knowingly and willingly attempt to make false statements or representation, expressed or implied, concerning either present or past (Raymond Serafin and Gary Levin,1990) is commonly practiced by modern managers.

Managers along with the companies should be enforced to make their cost structures more transparent (Piercy 1999:122-46)

Individualism allows for others' interest and well-being to be disregarded or not, as long as what is chosen is efficacious in satisfying the self-interest of the company.

Practices of cheap raw material for the company profit totally prove this theory practicing unethical business.

Utilitarianism raises the idea of greatest good for the greatest number affected by the act (Sorrel et al,19994). The act of deception as well as miss-statement of the accounts misleads not only the consumers however effects on the shareholders wealth also, in order to make profits and sustain reputation in the business world. These unethical acts are against the philosophy of Utilitarianism as it only provides pains (Crane et al, 2007) to the society and environment.

It's completely against 'greatest happiness principle' (Crane et al, 2007).

Altruism talks about the moral obligation to help, serve, or benefit others, if necessary at the sacrifice of self interest (Maclagan, 1954). Acc to Maclagan (1954) also it's being demonstrated that the actions being performed by the mangers and the directors are completely against the theory of altruism as the acts are dangerous and non-justifiable to only promote their own welfare only.

Non Consequential theories promotes about being morally correct with moral actions that are more vital than the outcome (Crane et al, 2007).The immoral act of ignoring the disposal issues of the waste or by-products completely and fudging accounts for self -interest demonstrates a complete defy to ethical business.

Kantian theory of ethics (Soreel et al,1994) or ethics of duties(Crane et al,2007) gives another dimension to the idea of ethical decisions. Happiness is more about being worthiness to be happy.

The self idea of creating deceptions in fronts of customers and stake holders prove the selfish ulterior motives of the organizations.

They owe to people their rightful means to live and work in a safe, fair environment. Merely acting on the self- desires is totally unlawful and against morality.

Acc to Stark (1994), traditional theories are too theoretical and impractical, based on looking right and wrong according to ethics of particular actions (Crane et al, 2007).

So the Contemporary ethical theories proposes important alternative perspective of looking at the character of the decision maker (Nielson, 2006)

Virtue Ethics (Crane et al,2007) focuses more on the moral character, where the integrity counts and the morally correct actions count which are always being taken by virtuous characters. The management and directors may feel that the short-term profits would be sustainable strategy to grow however the real impact is long-term losses where the reputation and both personal image gets tarnished.

It's perhaps understandable that why environmentalists are trying hard to resume talks for climate crisis as one which was recently held in Copenhagen summit also. One of the key agendas were, to provide developing countries with financial incentives to preserve forests - REDD and REDD-plus (Painter, J., 2009).

"Climate change poses a threat to human society and to the natural world. Successive scientific reports, notably those from the Intergovernmental Panel on Climate Change (IPCC), have come to ever firmer conclusions about humankind's influence on the modern-day climate and about the impacts of rising temperatures".

Corporate Social responsibility exhibits the main idea of doing rightful means of business, as it clearly states that business don't just have financial objectives but also have responsibilities towards the society also. The four dimensions being focussed here are (Economic, legal, Ethical, and Philanthropic) (Crane et al, 2007), the concern related to doing harm to environment seriously relates to Illegal and unethical acts.

The concern of mall-adjustments is a clear line issue for economic as well as legal aspects.

The incident of 1989, the Exxon Valdez, "An oil tanker bound for long Beach, CA, from the Port of Valdez in Alaska, ran aground in Prince William Sound" (Trevino and Nelson, (1995).This act also shows the dreadful impact of Business on environments, although the cleaning efforts were made immediately, but the wildlife destruction (Contamination of fish population, death of 30000 birds) confirmed an immoral act.

It was obvious Violation of business Ethics: Violation of public trust (Hartley , 1993)

Feminist ethics also discourages the acts done by lubricant industries as the most un-empathetic, non-harmonious and a careless based approach (Crane et al, 2007) to situations. Feminist ethics is an approach just opposite of what is being performed as a moral duty by lubricant industries to satisfy their own needs and wants'.

The quality is the main concern, both for the environment and for the human beings for their industrial consumption. The managers and company to pool more money, invest very less in R&D, even for the new products also. Ignoring the real value of serving the customers they instead serve themselves with profits.

Conclusion:

In addition to the improved moral behaviour, it is our hope that business leaders realize that they have the potential to transform the corporate world that promote excellence, prosperity and fulfilment.

On a wider aspect, the corporations can be made accountable for stake holders through Environmental Accounting and Social reporting (Gray, Dey, Owens, Evans, and Zazdek 1997; Livesey 2002; Zazdek, Pruzan, and Evans 1997).

A reasonable growth is the one which relates to the environmental concerns and promote the social welfare of the people.

Apart from developing the practical solutions to environmental challenges, there has to be re-evaluations (Welford, 1995) of those solutions repeatedly in accord of long term- sustainability.

"To deny future generations even part of their natural heritage millions of year old, to destroy it for all time, is just morally wrong….Evolution is not going to replace this heritage in any period that has meaning for the human mind".

Edward O. Wilson (1992)

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