Business Ethics - Social Environment, Business Environment Video Lecture | Business Environment - B Com

hi everyone in this latest topic
briefing I want to introduce and take a
brief look at the important vailable
business topic of business ethics let's
start by thinking about what do we mean
by this this term ethics ethics are
essentially guidelines about what is
good behavior they're all about people's
morals
organizational models and therefore
ethical behavior is about that the
behavior there's MOLLE right now you
might look at that that statement there
and say well who decides what's right
and what's wrong surely that's it that's
an opinion that's a subjective judgment
and of course you're quite right that's
the point about ethics that all of us as
individuals have a different moral
compass we have a different view as to
what is good what is evil what's right
and what's wrong and of course you can
imagine it even within an organization
within it within an industry they're
going to be variations in those
perceptions so business ethics important
point to remember and perhaps to develop
in your any line relevant lines of
analysis it's a highly subjective
concept another important point to to
consider is that there is a significant
difference between ethics and the law
the Lexus very clearly about what is
right and what is wrong and that's to a
large extent or almost wholly subjective
whereas behaving lawfully it's quite
clearly about what is lawful within the
law and what is unlawful outside of the
law now the reason why that's an
important distinction or comparison to
make is that as you look at business
examples you'll often come across
situations where the business appears to
be acting lawfully but you might argue
depending on your moral compass they are
acting unethically so take a couple of
examples the one on the left there the
issue of payday loans companies these
are financial services businesses that's
what now increasingly regulated but some
of them unregulated providing short-term
loans called payday loans because the
people who take the loans out are
waiting for the next time they get paid
but they have cash requirements to spend
typically these loans are very high
effective rates of interests in
thousands of percent now you might argue
that that is an unethical thing to do
but until recently it was almost
entirely legal industry has since been
regulated what about one of the
right-hand side there importantly tax
avoidance ensuring that you don't pay
taxes that you don't have to pay it's
entirely legal tax law is very clear
it's very complex but it's very clear
and multinationals like Google and
Starbucks and Amazon and all sorts of
others have over the last few months and
years being criticised for their very
complex tax planning arrangements that
enable them to minimize the amount of
tax that they pay the important point
tax avoidance is legal you might argue
depending on your your moral code your
moral compass as to whether or not you
believe that they are acting ethically
in that situation and of course the
important thing to remember is that
within any industry within any firm
there will be a variety of different
approaches to morals Noel Coward often
or famously said I guess referring to
the possible lack of of morals within
certain industries the higher the
buildings the lower the morals and that
I suspect something in that there are
two main ways in which business ethics
get challenged as you undertake business
and they arise from the behavior of
individuals for example that could be
specific individuals in a particular
role where acting unethically has it as
a potentially damaging effect it could
be individual management for example the
CEO but also ethics are to large extent
determined by the organizational culture
of a firm or organization and one quite
nice bit of theory here which you could
perhaps build into your lines of
analysis is that there is a sort of a
spectrum of approaches to to ethics
within an organization on the one hand
at one end of the spectrum you have the
business that just couldn't give a
monkey's about ethics that they are in
business to win at all costs and
absolutely everything is acceptable
including breaking the law but certainly
acting in a way that you and I might
feel is is unethical the so-called a
more business a business without models
right at the other end of the spectrum
or the scale is the truly ethical
business a business that seeks to simply
exist in order to act ethically
everything it does everything it says
the wait treats its employees its
customers and its other stakeholders is
based around the very best practices of
ethical behavior and somewhere in
between a whole bunch of other
organizations probably the vast majority
of businesses that yeah on one on the
one hand may we just want to stay within
the law and move Nibbs know they'll
touch on ethics but they won't be too
concerned about it whereas there'll be
these other responsive businesses that
you know by and large accept that
behaving ethically is the right thing to
do
an important part of doing business it's
not the core of their business but they
would consider that actually there is a
there is some advantage some commercial
benefit from being from being an ethical
business that's quite a nice way of just
categorizing the sort of the different
theoretical approaches to ethics within
the business it's a nice example of a
theoretical model that you could build
into a line of analysis to help compare
and contrast the different approaches to
ethics within businesses another
important thing to remember as we're
thinking about Theory here is that
ethics is very closely linked with the
concept of CSR or corporate social
responsibility they're not quite the
same thing but the links are very close
so by and large a firm that considers
itself to be socially responsible in the
woods taking into account the needs of
its wider stakeholder group not just
shareholders by and large that firm will
also want to consider
self as being an ethical business
because the assumption is that most
stakeholders would expect the firm to
behave ethically and similarly an
ethical firm will expect as part of its
broader responsibilities to be looking
after its responsibilities to to social
stakeholders but there is a distinction
the two are very close together but
there is a distinction CSR social
responsibility is all about stakeholder
responsibility ethics if we said right
at the start of this short briefing is
all about about moral behavior but we
have to accept and it's right to accept
that the two are very closely very
closely linked and as a result you often
find increasingly for businesses and
organizations that want to make public
statements about their ethical position
about their approach to CSR and indeed
to try and state how those should be
addressed within the organizational
culture you'll often see ethical codes
of practice both within an organisation
and publicly communicated to outside
stakeholders so look out for some
examples of those as you start to look
into CSR look out for the examples of
ethical practice as part of parts of CSR
now we're going to go to lots and lots
of detail about ethics but I think it is
worth just highlighting some common
areas where ethics are challenged or
tested in business I've listed four or
five of them there on the screen and
we'll just have a look at a couple of
examples these aren't the only areas
where ethics are tested because as we've
said previously ethics the the MOL
behavior of individuals within an
organization is done both at the
individual level as well as at the
organizational level and therefore it
can affect all parts of the operation of
an organization but let's let's take a
look at a couple of these just to just
to illustrate the point as to where
ethics typically get challenged and
raised for example what's your view on
this cold calling yeah you're at home at
night on your mobile and it's and it
rings and it says there's no caller ID
and you answer it and it's it's one of
those
double glazing firms or perhaps more
likely that you've you find out you've
neglected to submit yet another claim
for payment protection insurance your
being cold call someone's got your
number they're looking for you to sign
up start to generate some revenue for
the for the business making the core is
do you consider that to be ethical
marketing behavior now by and large most
consumers would find those kind of calls
pretty unwelcome even if they're
registered with the telephone preference
service they still seem to come through
but what about the sales director who
needs to get a thousand calls completed
and ten customers signed up each day
would he or she consider those calls to
be unethical so judgment call isn't it
what about the whole issue of ethics and
the the increasingly integrated nature
of the supply chain the way in which
your business communicates and contracts
and manages its suppliers see lots of
examples humbly over over recent years
of where supplier situations factory
conditions sweatshops disasters at
factories overseas issues around health
and safety and environmental have come
to the fore and you might argue actually
that the company that has been using
those suppliers has been less than
ethical in terms of the way it has
organized its relationship with those
suppliers perhaps it's been found found
out by not paying any kind of normal
minimum wage or not complying with local
health and safety legislation so the
complexity of supply chains often brings
up all kinds of ethical issues I'm
thinking a bit closer to home the issue
at the moment around the supermarkets
and whether they have put perhaps abuse
there greater buying power with key key
suppliers is that a question of
unethical behaviour it's probably not
illegal but is it unethical
gout - for increasing activism amongst
the stakeholders affected by unethical
behavior look out I'm just going to
highlight a couple here one is that the
role of pressure groups in particular
through the use of social media but also
the potential commercial damage that can
arise if a firm is found or is perceived
to be acting in an unethical way the
pressure group is quite interesting lots
of examples over the years the the one
on the screen there the fairly famous
very famous Greenpeace campaign that
targeted Nestle's use of supplying palm
oil from plantations that had been grown
by effectively destroying the habitat of
orangutan it was a hugely successful
pressure group campaign and eventually
forced Nestle to change its supply
supply arrangements and think also -
about the increasing use of consumer
action consumer activism in many ways
this is a manifestation of the way in
which stakeholders can actually fight
back against what they perceive to be
unethical behavior for example the tax
avoidance issue it's thought that the
one of the reasons why Starbucks agreed
to pay I think is 10 million pounds of
corporate a corporation tax initially
was as a result of the backlash from
consumers fueled by their ability to to
collaborate and communicate with each
other using social media they started
boycotting Starbucks stores and who
knows what the real reason was why
Starbucks climbed down and offered to
make the corporation tax payments but so
it appears that the consumer boycott had
an effect and what what they were saying
what the other comes those who are
involved in it boy he was saying was tax
avoidance it's unethical it might be
legal but it's not the right thing to do
so we know I guess we to tively feel
they'll actually a business that
ethically it's perhaps more likely to
succeed than one one that doesn't you
know it's fairly easy to build a line of
analysis that says that an ethical
business particularly if it can
communicate that that approach if it's
genuine and it can communicate that
approach to customers that may result in
improved brand and business awareness
it's probably going to be an
organization that employees want to work
for by and large people want to work for
businesses that they feel match their
moral compass we're seeing the rise of
ethical investments more finance is made
it's being made available to businesses
that can demonstrate an ethical track
record so this year there's three or
four ways in which you can build a case
to say and there's a business benefit
from acting ethically and similarly you
could also identify the costs the
potential damage to business from being
found to be acting unethically if you
ought to see some examples of businesses
that are perceived to be the most
ethical there are a whole bunch of of
different surveys that come out each
year I'm never quite sure how they're
scored how they're how they're evaluated
and whether or not there's any any
payments involved in those appearing in
the list I guess by definition any
payment would be an act of unethical
behavior but so maybe I'm just being a
little bit paranoid about that but take
a look that link there Etta sphere comm
is an excellent site each year they
produce a list of what they believe to
be the world's most ethical companies to
member on our spectrum these will be
right on the right-hand side companies
for whom ethics is that is that is the
essence of their business activity but
similarly look out make sure you've got
three or four examples of where a
business has suffered in particular
suffer cost as a result of being found
to have acted unethically and I think
perhaps the best example that we have of
this at the moment is the spiraling cost
of the damages and claims made by
consumers for having been Mis sold
payment protection insurance the
so-called P
p.i scandal and we're talking about tens
of billions of pounds of costs for UK
financial institutions just about all of
them several years ago had a product
called payment protection insurance that
they sold very aggressively to consumers
who simply didn't need it and the key
issue was that having been found out
they're now facing the backlash from
that from that very unethical behavior
in my view very unethical behavior also
look out for I think perhaps the most
topical example in particular following
the recent introduction of the diversity
profits tax plan George Osborne look out
for tax avoidance I think that's a
classic if only because it helps make
the point that there's a significant
difference between acting legally tax
avoidance is legal but acting
unethically is it more important for
these multinationals to do things right
and in other words at ethically rather
than just doing the right thing
now there are a whole bunch of different
ways in which ethics could be could be
examined and in particularly if you're
taking an essay question on this you
could get a specific question on ethics
don't forget that ethics also very
closely linked with CSR and of course
ethics is always going to be one of
those factors that you might bring into
a line of analysis in an alternative
alternative question I've just listed
out three or four possible essay
questions that you might want to have a
think about there they'll ask a little
bit of different thing but they're based
around the same concept quite like the
bottom one which almost invites you to
consider that spectrum of approach and
whether there is an implied conflict
between acting ethically and acting in a
way that maximizes profit the ethical
business would say no actually the two
are entirely consistent the business the
AML business would serve close to this
massive massive contradiction ethics you
know it's nice to have but if I need to
make money I'll make money in whatever
way
I can the third one down there do big
businesses tend to act in less ethical
ways than smaller businesses is a
contrast there that you can you can make
and also the one about the second one
down maybe that's the last one to think
about there should you allow a business
to act unethically if actually it gives
customers exactly what they want so I'm
thinking there about for example a fast
fashion retailers fast fashion retailers
give us exactly what we want the clothes
we want the styles we want at the price
we demand which is typically very low
now in doing so it's argued that there
perhaps acting unethically in terms of
their supply chain but does that matter
provided that you lie as consumers again
exactly what we want which is great
products at very low prices that you can
buy straight away should we really be
too concerned about the ethics of the
supply chain some interesting questions
for you to consider more than happy to
continue the conversation around
business ethics if you want to get in
touch follow me on at 2 to you on
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getting in touch this has been a short
introductory briefing on a core business
topic of business ethics I hope you
found it useful