What Is Business Ethics Management Essay

2511 words (10 pages) Essay in Management

5/12/16 Management Reference this

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I have chosen BP as my organisation to base this assignment on. I will be identifying and describing what ethical issues and problems (dilemmas) may occur when the organisation tries to achieve its aims and objectives. I ve also used Tesco as an other organisation to gather more information . So the two organisations which have been selected are Tesco and BP and with respect to these two organisations both Business ethics and Unethical issues will be discussed.

Aims and Objectives of BP

BPs objective outlines a shared vision of their company and reflects on their core values. This helps them to set common standards and goals in their financial, environmental, health and safety and social performance.

These are the main aims of businesses including BP:

Profit maximisation CSR is concerned with many aspects but most significant issues tend to be human rights, labour conditions and environmental impacts. The risk can directly affect sales, costs, quality and other key aspects of business performance. One of the problems that BP face is not only the extraction of oil and the energy use of BPs own operation, but more significantly of the impact on climate change of the actual use of all the oil by BPs customers. The main problem that stands out is that whether or not human society can actually afford to burn all the hydrocarbons. If BP is not burning the hydrocarbons (toxic waste) partly because it would be expensive and leave it for the community to do it or to even let them suffer than would classify BP as an unethical company.

To expand – A company with such far-reaching operations in developing countries also needs to carefully look at its approach to human rights, and ethical business practices. BP will have significant impact on local communities – both as a huge employer and through the nature of its on-the-ground operations. It should expect to seriously seek to reduce negative impacts here, and to invest seriously in those communities in order to help. This is how it should be; businesses should make local communities their first priority and make sure they are not harming the environment regardless of how much it might cost them because there is no right way to do a wrong thing, so if they are harming the environment that would be unethical. This would not be acceptable under an ethical CSR view where firms do what they can to prevent their actions harming stakeholders but its not the positive action to please the stakeholders. Actions are unethical if they wont stand scrutiny.

Increase market share the one of the major problems that BP faces is the health and safety issues in work place. There have been many fatalities in the workplace of BP and many people have died due to the explosion and fire. Now this tells us that the multi-billion oil company is not spending a lot on health and safety at work as these fatalities been occurring almost every year and most of the employees have suffered, and they couldnt care less because they dont want to upset their stakeholders by not giving them their share in the market so instead of doing the right thing which is to improve the health and safety issue in the workforce they do the wrong thing by maintaining a good relationship with their stakeholders which is also the right thing to do but perhaps not the positive way to do it and this is how they are increasing their market share so more people will be investing in their business but remaining a criminal in the view of CSR.

Increase sales BP has reported a 25% increase in annual profits on the back of rising crude oil. Profits for BP did not sit in the company; they were reinvested or given to shareholders, which is basically the pension fund of the UK. BP multi-billion profits based on rocketing oil prices; there is no doubt the oil companies have profited whilst the pensioners have suffered. If there is any justice in the world, then a part of those excess profits should go towards helping those whose pensions have been robbed and if BP doesn t want to remain the criminal in the CSR world. If they do this it would gain them more respect in the eyes of the communities which would result in more sales.

Social Responsibility is the obligation of organisation management to make decision and take actions that will enhance the welfare and interests of society as well as the organisation. Social responsibility is quite important to the society, organisation and human. There are several reasons to support the importance of social responsibilities. It is related to the ethical and discretionary responsibilities. There are six main areas of social responsibility, the employees, providers of finance, consumers, community and environment, government, and other organisations or groups.

D1 consequences for different stakeholders if firms conduct their business in ethical/unethical manner

I have chosen the company Tesco to analyse the consequences for different stakeholders of Tesco s to see if they conduct their business in ethical or in an unethical manner using examples.

Tesco believes that corporate responsibility is not an additional burden or a distraction from serving the customers; it is an essential part of sustaining ourselves as a responsible company. However, according to two independent rankings of top companies in 2004 named Tesco as one of the worst offenders on social and environmental issues and heavily criticised its Corporate Social Responsibility (CSR) report for being incomplete and inadequately verified.

Social audit a process that enables an organisation to assess and demonstrate its social, economic and environmental benefits and limitations. It is the way of measuring the extent to which an organisation lives up to the shared values and objectives it has committed itself to. Social auditing provides an assessment of the impact of an organisation s non-financial objectives through systematically and regularly monitoring its performance and the views of its stakeholders.

Ethical impacts advantages and disadvantages for treating stakeholders in an ethical manner:

The main advantage would be that your company will be able to maintain its high ethical standards and because you re practising activities in an ethical manner that will help you to stick to being ethical no matter what.

Good public image/reputation

More investors will invest in your company

Consequences for conducting business in an unethical manner

No matter how good of a business you are at some point you may seem to drift off and that s when you start having bad reputation and conduct activities in unethical manner. There are very few companies who can actually maintain a high standard and not become a victim/criminal of the CSR world.

Environmental damage our environment is paying the price of Tesco s success. Its stores are energy-intensive eyesores. Its food is flown from all over the world and trucked around the UK, contributing to climate change. The company demand for ingredients like palm oil is turning natural forests into wildlife deserts.

Suppliers Tesco has driven down the price of meat, vegetables etc, because they have such a huge share of the market. It s a monopoly position; they can simply go and find someone else who will supply them at the price they want. In the CSR review, Tesco highlights the fact that it is in interest to work in ever closer partnership with suppliers. It says it is using its strength in the market place to deliver unbeatable value . However, from the point of view of the most vulnerable link in the chain, the farmers and workers, this amounts to forcing them to push down prices. Tesco s mission to deliver unbeatable value for shoppers has pushed down prices so far that some UK farmers are on the edge of bankruptcy. And research among it suppliers overseas reveals that some pay workers wages which keep them in poverty and have only minimal health and safety protection in place. This has huge consequences, not just for suppliers and farmers but also for farm labourers, the environment and animal welfare. We all have heard of numerous cases of poor treatment of suppliers by Tesco. Sadly, some of the suppliers refuse to speak against Tesco in fear of losing their contracts.

According to Competition Commission five years ago, they had examined anonymous complaints from farmers. In its report are cited 30 ways in which supermarkets exploited their power over suppliers. These included requests for over riders and retrospective discounts, requests for promotion expenses, making changes to contractual arrangements without sufficient notice, late payment of invoices and unreasonably transferring risks from the supermarket to the supplier.

Employees working in Tesco stores can be low-pay option too, and conditions are often demanding and physically challenging. Tesco is even trailing a scheme to stop workers sick pay on the first three days taken off. As it stands, statutory sick pay only kicks in after the first three days when the company can claim about 80% back from the government.

According to the February 2005 edition of The Ecologist, Kevin Harrison, a former lorry driver for Tesco, recounted the cost of driving Tesco s cheap food across Europe. He said every time I loaded (frozen chicken) at the producer in central Europe, the truck was overloaded. My Truck was soon five tonnes over its 40 tonnes (gross weight) as the normal load was 20 tonnes, so effectively Tesco got one free load every four loads that were carried . Overloading Lorries not only damages road surfaces, at a cost to the taxpayer, but also compromises braking abilities. This clearly shows that Tesco are not conducting business in an ethical manner as they are damaging the environment. If firms don t stick to promises (targets) in its social audit it will face a lot of pressure from pressure groups.

For Tesco, what consumer wants, or is perceived to want, is what Tesco will provide, and this strategy has been key to its business success since customer needs are, in reality, merely a means to an end. Behind the customer lies the shareholder whose needs must ultimately take priority.

Tesco is committed to conducting business in an ethical and socially responsible manner. This relates to all aspect of business, treating employees, customers, suppliers and most importantly shareholders in a fair and honest manner and ensuring that there are constant and open channels of communication. I personally believe that business should aim to treat their stakeholders equally just giving that bit of importance to their shareholders and making sure they get their dividends on time as this will help you as a business to be more success by satisfying your shareholders and when they are happy they will tend to invest more in the business and that would attract a huge number of other shareholders investing in the business.

I personally believe that being unethical actually can have short term gains. It has certain appeals just as evil sometimes has certain attractiveness to it. It appeals to our greed, our desire to have power, our desire to be superior to others. But in the long term, you ll really pay often in an unimaginable/unexpected ways. Consumers today are becoming increasingly environmentally conscious and care more about the ethical stance (position) of firms.

D2 Ways in which stakeholders may influence the ethical behaviour of business

Stakeholders influence businesses to conduct their business in ethical/unethical manner in many ways to get what they want. For instance, Environmental group Friends of Earth (FoE) has launched a campaign against Tesco, saying the supermarket group engages in unfair and unethical trading practices . FoE accuses Tesco of damaging local communities, smaller retailers, suppliers, and consumers. The group s call for action to restrain Tesco and its rivals came late last week as the company prepared for its annual general meeting in London. Tesco said it was a responsible company that took pride in how it serves local communities. FoE is campaigning for limits to the floor space of supermarkets and has called on local planning authorities to consider more carefully the impact of out-of-town developments on businesses in town centre before granting planning permission. FoE also seeks restrictions on Tesco s takeovers of convenience stores chains. Tesco claimed that it supports local communities and creates jobs for local people . Tesco wrote to FoE, rejecting each of the misleading claims they have made and said we are proud of our record of serving communities around the country and the benefits we bring, such as jobs, housing and investment in local economies. It is disappointing that Friends of the Earth continue to ignore these benefits and the views of the majority of customers and suppliers with whom we talk everyday . This clearly shows that after being put under pressure from FoE Tesco successfully defended itself from false accusation that were made against it. Therefore in this example FoE failed to influence any change on the business and also failed to influence the decisions the business makes.

This example is about Environmental Investigation Agency (EIA) and Greenpeace. These pressure groups successfully influenced the ethical behaviour of Tesco. This campaign was created to end the sales of whale meat in Japan. The groups demonstrated that they was an increasing concern amongst Japanese consumers, and that falling prices and growing stockpiles of whale meat indicated a significant decrease in domestic demand for the products. The groups pressed Tesco to consider this wealth of evidence and end selling whale meat. EIA and Greenpeace met with Tesco representatives on two occasions and told Tesco the UK s leading retailer to immediately withdraw all whale meat products that were being sold in at least 45 of their supermarkets stores in the Tokyo area. More than 20,000 small whales, dolphins and porpoises are also killed in Japan s coastal waters. A significant percentage of the cetacean (large sea animals) products on sale in Japan have been shown to be highly polluted, posing a potential health threat to consumers. These groups made statements such as contaminated whale products being sold , threat on human health and for these reasons alone, Tesco should stop endorsing such products.

Tesco took its decision to stop selling whale products shortly after their second meeting, and indicated that it had immediately stopped purchasing whale meat. According to Tesco they took the decision due to lack of customer demand . However in theory, they stopped selling because of the high pressure from these groups who successfully influenced a change in their behaviour. I personally believe that Tesco was afraid of losing its position in the market and getting a bad reputation, which clearly tells us that how these stakeholders can have a huge impact in the way you conduct your business.

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