The Theoretical Approaches Of Business Ethics Business Essay

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Ethics: This can be defined as set of moral rules that outline what is consider or believed to be the right thing to do. This simply means a way an organisation behaves to its stakeholders that are considering morally correct. Business ethics: This is a way an organisation operates in its society and makes good decisions that will improve the lives of individuals. This means how business rules and regulations are lay down to guide staffs on how to carry out activities in order to provide quality products and present acceptable behaviour.

Theoretical approach of business ethics are:

Deontological approach: The word deontological comes from the Greek Deon, which means 'duty'. Deontological theory is an approach that gives sense of identity to organisation by doing what is right and it add to business value in terms of being fair, honest, promise keeping, passion and respect for human beings and property. Deontologist focuses on duties, obligations and principles by doing what is right based on moral value such as honesty, fairness etc. The deontological theory is the Golden Rule that say 'do unto others as you want them to do unto you', this simply means treat people the way you want to be treated.

Consequentialism theory: Consequentialists believe the ends always justify the means. This simply means that whether an action is morally right or wrong depends on the action outcome. Consequentialism is too permissive and does not give individual or businesses proper rights, because the theory enable staffs feel confused and unguided by individual or organisation moral due to lack of priorities.

Utilitarianism theory: This is a typical ethical theory that place is actions of right and wrong completely on the actions result. Before making decisions it looks at the amount of people it will affect and the amount of people that will be happy with the actions. This enable individual or businesses to move beyond the scope of one's own interest and put into account the interest of others. It systematically compares the costs and benefits of decision, to know the total amount of people that benefit from the decision and select the right result through the highest number of people that benefit from the decision.

The concept of absolute and relative ethics

Relativism: This is where by what is morally right or wrong is determine through individual or group based on their believe. Relativism comes from different forms, but not all are directly significant to ethics theory. This simply means, what is right in one community, may be wrong in another society based on culture differences. For example, if Mr James culture believe that killing is morally wrong and Mr Danny culture believes that killing is not morally wrong. This two cultures are able to exist between one another, because of believes of the societies and its practice.

For a society to function effectively, it needs to accept some basic moral standards to guide and coordinate individual behaviour or actions. In terms of business point of view, a relativist looks at organisation strategy or decision and foresees the dispute it might cause to customers, supplier and the larger community in the future and act in advance. Relativism help organisation to lay down good strategy that will increase company value or image.

Arguments for and against relative ethics

One good argument that backs up ethical relativism is the significance the theory places on cultures i.e. the views and belief in the society and that of an individual is put into consideration and use as a yardstick for judging moral right and wrong.

The criticism is that members of a society may possess different views of what is moral and immoral, how do we know they are acceptable or not?

Absolutism: The concept of absolutism argues that certain actions are absolutely right and wrong regardless of their consequences or the motives behind them. For example, telling lies is viewed as morally wrong in any situation even if what prompt the person to lie is justifiable.

In a nutshell, ethical absolutism states that there exists one universal moral standard which is considered absolute and applicable to every individual at all places and at any given point in time. It is also important to note that an absolutist does not use existing views in the society, individual culture etc as a yardstick for judging moral right and wrong.

Arguments for and against ethical absolutism

Since we have different societies each having basic standards for moral right and wrong, ethical absolutism is considered as a theory which will lead to confusion in our very many societies i.e. since moral standard will be based on universal principles. Unlike ethical relativism, ethical absolutism is readily evident in the society today. For example, everybody perceive stealing or telling lie as immoral and many people to some extent, try as much as possible to do what is generally considered morally right. This fact shows that to some extent, ethical absolutism is true.

The concept of absolutism has received a lot of criticism. Many people argue that an absolute theory will create less importance being attached to a particular society views or existing cultures which may have been used as a yardstick for judging moral right and wrong for many years. This is just criticising other people's culture. Another argument against absolutism is that the theory lack human concern. Using universal moral standards is viewed as jeopardising an individual moral judgement

The explanation on how ethical issues can affect the operational activities of today's business

In today's business, ethical issues provide moral guidelines for conduct of business affairs. This enable organisation to know what is morally right and wrong within the business environment. Also, ethical operation as help in coordinating firm's behaviour towards it customers, employees, environment etc. by ensuring businesses comply with Employment Law, Equal Opportunities Act, Consumer Protection Act, Health and Safety Law etc. in order to be fair to individuals that are loyal to them. Furthermore, it also help organisation to understand the implications of not binding to the rules and regulations of operating ethically.

Ethical Employment Issues

Employment Issues are to protect the interest of employees in their various place of work. The employment issues outline the right of workers and the responsibilities of employers to protect its workers in term of being fair, honest, care and support them. In today's business for organisation to take on board ethical issues its need to implement all these rights, such as:

Equal Pay Act of (1970): This require employers to ensure employees employed for the same job, should be offers equal pay and conditions for equal work. For example, if Mr James and Ms Kate are employed for the same work, they should be given the same equal pay and condition. By not segregating that the woman should be pay less.

Sex Discrimination Act (1975): The purpose of this Act is to deprive discriminatory issues that are relating to promotion, recruitment, dismissal, and conditions of service. To enable businesses operate ethically and treat it's staffs equally without looking at their gender differences.

Ethical Environmental Issues

Environmental issues are describes as pollution, sustainable development and global warning. In today's business operations, more effort is being put to measure organisation performance through environmental audits. However, for business to be successful its need to consider being environmental friendly, by looking into the effects of its operation on the environment and strive to minimise any damage it may cause to the environment. Any organisations that have environmental policies in place and practice it, add to its marketing techniques. In the UK only few organisations such as large businesses take on board environmental issues very seriously.

Pollution: A manufacturing company that involve in air pollution without considering the effect on its employees, local people and environment can cause harm to them. Because air pollution reduces air quality and cause problem such as global warning in term of C02. In today's business any organisation that did not take on board environmental factors or operate ethically is damaging its business reputation, which can affect its sales and reduce profits.

Recycling: Generally, extracting of raw materials is quite expensive and damage environment as well. So for organisation to put in place environmental policies as enable business to reduce the extraction of raw materials, through recycling it waste materials and contribute to the cleanliness of the environment.

Ethical Consumer Issues

Consumer protection issues is an approach that put the interest of consumers at the heart of operations, based on how organisation operate and make decisions that will not cause harm to its consumers. To save consumers from unethical or unfair issues practice by most businesses and to deal with consumer's safety.

The following are the major consumer Acts:

Sales of Goods Act (1979): This Act states that organisations products must be of standard quality. And fit for the purpose for which consumers need it for, and must not be falsely described to mislead consumers through the content written on the label of the product. This simply means the content written on products label should be what the consumer gets when purchased.

Fair Trading Act (1973): This Act create Office of Fair Trading, which its responsibilities is to monitor unfair trading of business practices and take action against any company that breach consumer protection factors. on 23/11/2010) ""&HYPERLINK ""r.l1=1073858799HYPERLINK ""&HYPERLINK "" ""&HYPERLINK ""r.l3=1080460523HYPERLINK ""&HYPERLINK ""r.l2=1073877897HYPERLINK ""&HYPERLINK ""topicId=1080460523HYPERLINK ""&HYPERLINK ""r.i=1080460972HYPERLINK ""&HYPERLINK ""r.t=RESOURCES (Assessed on 23/11/2010) (Assessed on 23/11/2010)

How business objectives are affected by ethical considerations

Generally, any organisation that does not operate ethically, that want to consider ethical operation will be affected, because of company objectives lay down. Some of its business objectives will be change to suit ethical ways of operating. For example, a business that does not provide quality products and services for consumers, now have to look into providing quality products and services that will satisfy customers needs and wants, through ensuring is being honest and fair on the kind of products produce and service render.

However, this may affects the business profits in the short term but in the long term the organisation will increase its profits, the moment the existing customers and potential customers are aware of its ethical operation, and it contributions to the development of environment, it will enable the business brand name to be known and boost up sales.

An organisation whose business objectives did not support ethical operation, and want to consider operating ethically, this may increase firm cost in term of improving working condition, in order to make work place a safety environment to work for employees. Also looking into donating for charity will reduce business profits because the donation is being taking out from company profits, which reduce shareholders dividends or business owner profits. But in the long run it is profitable for the organisation.

In addition, business objectives will be affected by ethical consideration based on positive change it does bring to organisation. When company operate ethically, it enables the management to make good decisions, take actions that will increase business reputation and values by evaluating decisions and actions. For organisation to know what is right, value what is right and do what is right help in maximising it profits.

The implication for a business and its stakeholders to operate ethically

Ethical business is all about looking beyond economic objectives and considers the implications of your business decisions. It is very vital for local and international businesses today to operate ethically and take into board the health and safety of customers, employees, environments etc in order to be a successful business. However, when an organisation carries out social responsibility policies, this is not just good for the environment and the wider society but also good for the business as well.

The arguments for business operating ethically

Arouse investments, when a business operates ethically, this encourages numbers of investors to invest into the business, due to its future brightness.

Treating employees fairly and giving them the opportunity to develop with the organisation, enable them to keep loyal and motivated when performing their work.

Boost sales through increase in customer's patronage, due to business transparency, fairness in prices and quality products provided.

When business operates ethically, these add value and develop growth for the organisation, due to good relationship with the community, environment, employees, customers etc.

By operating ethically give new idea to business, on how to cut its cost and save money for business by being environmental friendly (e.g. Tesco introduce paper free pay slip for employees, which is one of its strategy to operate ethically by being environmental friendly, which save the organisation money).

In addition, any organisation that operates ethically, it gives them a competitive advantage over its competitors. The support of corporate social responsibility provides higher financial returns, improve the organisation reputation and enhance overall business performance.

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The Time (2010) edition 13, page 5, Ethical Business, Available at: (Assessed on 20/11/2010)

The arguments against business operating ethically

Reduce profitability: For a business that adopt to operate ethically it face higher costs. Organisation needs to turn down unethical operation that offer high returns (e.g. using cheap labour is morally wrong but it can be very profitable and for a manufacturing company who purchased raw materials without regard to the environment is unethical. Considering buying it raw materials from a sustainable sources will incurs higher costs and sell in the same price will reduce business profits.

Conflict with existing policies: When organisation adopts to operate ethically, this may create internal divisions within the business based on the old policies used before. An organisation with a tradition way of delegating and empowerment may experience problems during introducing ethical policies. Staffs may see this as an autocratic. Even if employees view an ethical policy favourable, it may be difficult to implement it into everyday activities. This may require training, which will cost business more money.

The implication of stakeholders to operate ethically

A stakeholder can be defined as an individual or group which affects and is affected by the organisation. For business to make ethical decisions, it must consider the interest of various stakeholders, by deciding which of the stakeholders it should place first among the others. Most organisations focuses on the needs of stakeholders groups while others believe a firm's sole duty is to satisfy the needs of its shareholders. Why forgetting that shareholders will not be satisfy if the employees, customers, community and suppliers needs are not meant. In today's business the implications of stakeholders to operate ethically are:

Shareholder: These are people who invested their money into a business, for the purpose of having good return in the money invested. The reasons of investing their money, is based on corporate image that will yield profits. When business operate ethically by taking on board social responsibilities, this reduces shareholders dividend because the funds used for supporting social responsibilities, such as improving the local environment comes from business profits. Which affect shareholders dividend and also, when too much money is put into social responsibilities, it could lead to shareholders withdrawing their investment from the organisation.

Customers: For any organisation to be successful depends on its customers, so meeting their needs is very important, and to meet customers' needs business need to put in place the following: fair pricing, provide quality products, good promotion, health and safety and proper labelling and packaging by being ethical.

Fair pricing: This is where by the value of product must match with the amount of money customer paid for the product. If the amount paid did not match the value of the product this could lead the customer to look elsewhere.

Providing quality products: In this situation, organisation should ensure it sources of getting raw materials or readymade product is ethical and safe for customer's consumption. For example, if product bought cause harm to any customer this can lead to legal action being taken against the company. The firm could be fine in the court and still lose some of its existing customers.

Proper labelling and packaging: This is where by products labelling and packaging should not mislead customers in term of operating ethically. In this situation, the contents written on products should be what the product is made of, to satisfy consumers. For example, if the content of a product says sugar free and is not sugar free this can make customers not to trust the organisation.

Health and safety: Customers and employees should feel safe when in the work environment. Organisation should ensure proper caution signs are well place when needed (e.g. caution!!! please be careful the floor is wet). (Assessed on 23/11/2010) (Assessed on 23/11/2010)

Suppliers: An organisation that really value it customers should ensure good suppliers are ethically taking care of, by being honest, fair and pay them as at when due. Because fail of payment could cause distrust which may lead to supplier not to respond to the company demand on time.


Business ethics is part of today's society, which gives businesses a code of moral rules that outline what is consider or believed to be the right thing to do. This simply means a way an organisation behaves to its stakeholders that are considering morally correct. The theoretical approaches of business ethics give various way of how businesses make decisions that affect stakeholders positively or negatively, it does include deontology, utilitarianism, consequentialism and egoism. Furthermore, ethical issues enable organisation to take precaution on how it operates, through setting guideline on how business should operate, in terms of environment factors, employment factors and consumer protection factors.


It is highly recommended for businesses to operate ethically by considering the effects of their decisions and operational activities to the general society. Organisations aim should not only focuses on profit maximisation without looking at the effects of its operation to the employees, environments and consumers by ensuring quality products or services render and wages paid are up to standard. Moreso, it is recommended for organisations to focuses on the needs of stakeholders groups such as customers, employees and suppliers, rather than focusing mainly to satisfy the needs of its shareholders which may cause a disaster to business.

References (Assessed on 23/11/2010) (Assessed on 24/11/2010) (Assessed on 23/11/2010) " &r.l3=1080460523&r.l2=1073877897&topicId=1080460523&r.i=1080460972&r.t=R ESOURCES"&HYPERLINK " &r.l3=1080460523&r.l2=1073877897&topicId=1080460523&r.i=1080460972&r.t=R ESOURCES"r.l1=1073858799HYPERLINK " &r.l3=1080460523&r.l2=1073877897&topicId=1080460523&r.i=1080460972&r.t=R ESOURCES"&HYPERLINK " &r.l3=1080460523&r.l2=1073877897&topicId=1080460523&r.i=1080460972&r.t=R ESOURCES" &HYPERLINK " &r.l3=1080460523&r.l2=1073877897&topicId=1080460523&r.i=1080460972&r.t=R ESOURCES"r.l3=1080460523HYPERLINK " &r.l3=1080460523&r.l2=1073877897&topicId=1080460523&r.i=1080460972&r.t=R ESOURCES"&HYPERLINK " &r.l3=1080460523&r.l2=1073877897&topicId=1080460523&r.i=1080460972&r.t=R ESOURCES"r.l2=1073877897HYPERLINK " &r.l3=1080460523&r.l2=1073877897&topicId=1080460523&r.i=1080460972&r.t=R ESOURCES"&HYPERLINK " &r.l3=1080460523&r.l2=1073877897&topicId=1080460523&r.i=1080460972&r.t=R ESOURCES"topicId=1080460523HYPERLINK " &r.l3=1080460523&r.l2=1073877897&topicId=1080460523&r.i=1080460972&r.t=R ESOURCES"&HYPERLINK " &r.l3=1080460523&r.l2=1073877897&topicId=1080460523&r.i=1080460972&r.t=R ESOURCES"r.i=1080460972HYPERLINK " &r.l3=1080460523&r.l2=1073877897&topicId=1080460523&r.i=1080460972&r.t=R ESOURCES"&HYPERLINK " &r.l3=1080460523&r.l2=1073877897&topicId=1080460523&r.i=1080460972&r.t=R ESOURCES"r.t=R ESOURCES (Assessed on 23/11/2010) (Assessed on 23/11/2010)

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