Transcript
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Sanjari international college
Business EthicsM Mohaiminul I Chowdhury
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Table of Contents
Introduction: .................................................................................................................................... 3
Task A: Ethical perspectives in business. ....................................................................................... 4
1.1 Background and development of theoretical ethical approaches ............................... 4
Background of Business Ethics: ...................................................................................... 4
1.2 Compare and contrast absolute and relative ethics .................................................... 6 1.3 Ethical issues which can affect the operational activities of a business .................... 8
Task 2: Business objectives from an ethical perspective .............................................................. 11
2.1 How business objectives are affected by ethical considerations ............................. 11
2.2 Evaluate the implications for a business and its stakeholders to operate ethically .. 12
Task 3: Ethics in workplace relationships. ................................................................................... 14
3.1 The role of the company acting as moral agent ....................................................... 15
3.2 Analyse the development of mechanisms for achieving employee involvement and
empowerment ................................................................................................................. 17
Task 4: Current ethical issue in a business. .................................................................................. 18
4.1 Current ethical issue affecting McDonalds: ............................................................. 18
4.2 How to improve ethical issues in McDonalds: ........................................................ 21
4.3 Design a suitable ethical code .................................................................................. 23
Reference: ..................................................................................................................................... 25
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Task A: Ethical perspectives in business.
1.1 Background and development of theoretical ethical approaches
Background of Business Ethics:
Business ethics is the attitude and ways in which a business is formed and the way in which a
business deal with the world. Many businesses behave in divert or different ways depend on the
way it‘s formed by the owners of the business. Business ethics can be described as principle and
standard that is guiding behaviour of people in the business. Many business have different
reputation depends on the ways in which they are formed some business have bad reputation
while some have bad reputation. Some businesses are formed for money making venture while
some are formed because they want to make money and at the same time want to give its
customers maximum satisfaction. The way in which a business is formed brings about ethical behaviour. Ethics is a set of moral principles that a business should follow and values that a
business should embraced in order for a business to be successful. Most business should have a
code of ethics in order for the business to have a principle guiding the business so that the
business can be flourishing.
Crane A and Matten D (2004) defined business ethics as the study of business activities and
decisions where issues of wrong and right are addressed.
DEVELOPMENT OF BUSINESS ETHICS:
The Development of Ethics‘ proves a rather misleading title for Terence Irwin‘s latest book. He
describes it more accurately as ―a selective historical and critical study in the Socratic tradition,
with special attention to Aristotelian naturalism, its formation, elaboration, criticism, and
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defence‖. ‗Socratic‘ refers to Irwin‘s method: not merely describing ―a collective Socratic
inquiry‖ historically but also evaluating it and taking part in it . B. Schneewind, who think that ―a
moral theory cannot be assessed timelessly, and there are no timelessly appropriate questions that
different moral theories try to answer,‖ Irwin declares that history reveals substantial agreement
on the main principles of ethics. The historian‘s task i s to discover them. Small wonder, then,
that Development does so little to illuminate how ethics changed over time.
Availablefrom:<http://muse.jhu.edu/journals/hph/summary/v047/47.4.kent.html,>[Accessed on
20 September 2013]
Teleological ethics:
Theories of this type are called teleological because they look at what happens (or will happen)
following an action which has a moral dimension – what the outcome (or end – which is where
‗telos‘ comes from) is or will be. Typically, one‘s actions may then be good if the outcome is
desirable. Of course, predicting what will happen if we take a particular course of action is not
all that the theories are about. They are ethical in that they prescribe what sorts of consequences
are good – ones we ought to do; and what sorts are bad – ones ought not do.
Deontology: This is a Greek word which means deno, which mean duty and the logos, means
science. It focuses on moral rules and duties. In order for us to make moral choice, we have to
know our moral duties and how we can adjust to those duties. If we obey our duties we are doing
morally things and if we fail to follow our duties we are doing immoral things. In deontology our
duties, rules and obligation is according to God wishes.
Utilitarianism
Utilitarian ethics emphasizes the consequences of our acts. And for utilitarians, the important
consequences are obvious: pleasure and suffering. From the utilitarian perspective, there is nomystery about ethics: the right act is simply the act that produces the greatest balance of pleasure
over suffering.
Though the formula is simple, the calculations may be complex. We must consider the
consequences not just for ourselves, but for everyone; indeed, not just for all humans, but for any
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being capable of pleasure or pain and not only immediate consequences, but also long-term
effects.
Pragmatic
Pragmatic ethics involves an evolutionary-based teleological theory — although not wholly
Darwinian in nature. 'Teleological' is often treated as a synonym for 'consequentialist', but it is
important to make a distinction. Consequentialist ethics measures the goodness of an action in
terms of its effects, relative to some value ('happiness' in classic utilitarianism). Consequently, it
is really an outcomes-based ethic. It does not involve movement towards an end, but a
maximization of a value.
In teleological ethics, on the other hand, the goodness of an action is measured by how much it
contributes to a certain end, function or purpose, and focuses on movement towards something in
an on-going process. Classically, such teleology‘s are external, i.e., imposed from without--
divinely, or by the order of things--or immanent, realized through an inherent nature.
1.2 Compare and contrast absolute and relative ethics
Relative ethics/relativism
This theory states that there are no absolute truths, validity or generally acceptable principles of
ethics and that what is morally right and wrong largely depend on individual and the prevailing
societal views and cultures. The fact is that the relativist believed that the criteria for measuring
right and wrong change over time and vary across cultures. Simply put, relative ethics is the
denial of ethical absolutism.
Relativism holds the view that morality is relative to the beliefs and norms of one‘s cultu re i.e.
categorizing an action as right or wrong depends on the moral values hold by the society in
which such action is practice. An action may be classified as morally right in one society but
morally wrong in another. In the light of this, the relativist argues that there are no broad and
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universally acceptable moral standards as these are dictated by what is being practice in the
society. Summarily, what is right for one may not be right for another or as a saying goes ―When
in Rome, do as the Romans do ‖ This is the idea behind the concept of relativism.
Arguments against and for relativism
One of the arguments against relative ethics is that some is the belief of some people that
universal moral standards is possible to be adopted even if some moral norms and beliefs differ
among cultures. Although, great attention can be given to cultural differences in moral practices
and beliefs, some of these practices and beliefs that are morally wrong should be pointed out; for
example, the practice of slavery before the civil war in various countries. Relative ethics fails to
recognize the fact that the rationale behind certain societal practices may be governed by self
interest.
Since the moral rightness and wrongness of action depends on what is prevailing in the society
according to relative ethics, it follows that one must obey the norms of a society irrespective of
whether such norms are generally wrong or right because to diverge from them is to act
immorally. Does it mean that if one is part of a society that embraces racial discrimination, one
should accept and promote it?
Also, it is possible that members of the same society hold different views and beliefs on a similar
practice. How do one judge what is morally right or wrong in such situation? The concept ofrelativism does not address this situation.
Despite the criticism above, the concept of relativism still has some acknowledgement for
addressing societal issues which are important. Relative ethics points out the fact that different
societies hold different beliefs and these beliefs are influenced by culture. It also encourages
individuals to explore the rationale for differences in belief while also challenging them to
examine reasons for beliefs and values they hold .
Absolute ethics/absolutism
The concept of absolutism explains that certain actions or decisions are absolutely right or wrong
regardless of their outcomes or consequences as well as the rationale behind them. For example,
eavesdropping to private matter might be considered to be always morally wrong even if the
reason for doing such thing is good, and even if it leads to good result.
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Simply put, ethical absolutism states that there is universal or one single moral code or standard
that is absolute and which is equally applicable to everyone in the society at all times. From this
fact, it is evident that absolute ethic is not dependent on individual views, existing cultures of the
society etc.
Arguments for and against absolutism
While moral relativism is seen as only leading to problems and c onflict in one‘s life and in
society, it was argued that moral absolutism will lead to no or little confusion i.e. when moral
standard is based on general principles. The other argument for absolutism is that it is true and to
some extent, seen in our everyday lives. For example, we condemn or criticize wrong actions and
praise good ones. This is an evidence that moral standard which is based on general views exist.
Judging what is right and wrong on a universal moral standard is seen as criticizing other
people‘s culture. According to the relativist, this is intolerant as moral criticism of others is
inappropriate. Another fundamental criticism of absolutism was its lack of human concern.
Critics argued that trying to maintain order by forcing or frightening people into conformity by
agreeing to a universal moral standard can destroy an individual potential for moral judgment.
Many philosophers also argued to oppose the idea of absolutism in a situation of life and death.
For example, suppose it is decided that it is absolutely wrong to lie under any situations, what if
one is faced with the choice in which he/she must lie as a result of no other alternative.
1.3 The ethical issues which can affect the operational activities of a business
Ethics refers to a prescribed or accepted code of conduct. Ethical issues are a set of moral values
that need to be addressed while carrying out business. Businesses operate in a society that is
structured around moral values. Therefore, when conducting its operations, a business has certain
responsibilities which are to provide the society with quality goods and services that will
improve the people‘s living standards.
In order to survive, a business needs to maintain its customers. Product packaging is one way of
ensuring a business maintains its existing customers and also acquire new customers. Some
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companies are known to allow underweight packaging of products which are then highly priced
and this is a rude way of increasing profits. However this negative trend will affect the business
in the long run as customers will eventually come to learn that they are being swindled.
In the long run, wrong dealings and corruption will tarnish the image of the business and have a
negative effect on sales. Business people ought to comply with the law requirements and observelaid down principles of morality in their dealings. They should seriously consider expectations of
the community they serve.
Values in business activities:
Ethics refers to a prescribed or accepted code of conduct. Ethical issues are a set of moral values
that need to be addressed while carrying out business. Businesses operate in a society that is
structured around moral values. Therefore, when conducting its operations, a business has certain
responsibilities which are to provide the society with quality goods and services that will
improve the people's living standards.
In order to survive, a business needs to maintain its customers. Product packaging is one way of
ensuring a business maintains its existing customers and also acquire new customers. Some
companies are known to allow underweight packaging of products which are then highly priced
and this is a rude way of increasing profits. However this negative trend will affect the business
in the long run as customers will eventually come to learn that they are being swindled.
In an attempt to boost sales, some businessmen adapt promotional methods that mislead
customers as the message conveyed may not give the exact details of the product.
Businesses should desist from increasing prices without valid reasons. In doing so, they will be
taking advantage of the customer and this is unethical. Businessmen should also desist from
taking part in corrupt practices such as selling low standard goods while bribing government
officials in order to continue operating. Entrepreneurs should consider the effects of their
activities on the society they serve.
Ethics on employee workplace and human rights:
Policies most frequently exist because some employees are untrustworthy. For example, many in
HR debate the effectiveness of a paid time off (PTO) policy versus time off policies that divide
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available days between personal, sick days, and vacation time off. The only reason these policies
exist at all, to define the relationship between employer and employees, is because a few
employees took advantage of the employer‘s attempts to offer sympathetic time off for legitimate
life reasons.
Consequently, employers limited management discretion and decision making about individualemployee situations and instituted policies to govern the many. You can build a similar case for
most organizational policies. The failure of some employees to practice principled workplace
ethical decision making results in policies that cover all employees.
Codes of conduct or business ethics exist to guide the expected behavior of honorable
employees, but much of their origination occurred for the same reason as policies. Some
employees conducted themselves in ways that were unacceptable to the business.
In today‘s workplace, potential charges of unfair treatment, discrimination, favoritism, and hostile
work environment replace much management discretion. The many suffer for the few and
sometimes, your best employees get caught in the equal treatment trap. At best, time off policies,
to use just one example, require organization time and energy – hundreds of hours of tracking
and accounting.
Ethics in corporate governance:
Ethical Corporate Governance refers to the processes and policies that a company has in
place to deal with issues concerning how it is administered and conducts day to day business. It
is important to remember that companies exist primary to create a product or service, which is
used to generate profit. However that intention must be balanced with controls that ensure a
company pursues profit without crossing over the line into the realms of unethical behaviour.
Stakeholders may only be concerned with a company‘s performance and earnings, but bad
corporate governance can be symptomatic of greater problems with the company. For example,
before the collapse of Enron, the company and its associated traders are believed to have
artificially inflated the price of energy in certain US states, thus increasing their profit margins.
While this action alone was not enough to cause the company to collapse it was a clear indication
that internal controls had failed, which of course meant that other much larger abuses were
possible, which eventually lead to the downfall of the company. (http://www.icharter.org )
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Task 2: Business objectives from an ethical perspective
How ethical problems are resolved in the context of the business or corporateand individual conduct
An organisation's core ethical values and standards should underpin everything that it does and
the way its employees conduct their everyday business. Business ethics is about "doing things
ethically". How an organisation approaches the social and environmental impacts of its business
operations and its voluntary contribution to the wellbeing of the global and local communities in
which it operates, is often known as Corporate Social Responsibility (CSR); it is often about
"doing ethical things". The IBE believes that an organisation cannot be genuinely responsible
without an embedded and inherent culture that is based on ethical values such as trust, openness,
respect and integrity. This is why the IBE prefers to talk about Corporate Responsibility (CR) asa wider, concern, rather than using the more limiting 'social' tag.
2.1 How business objectives are affected by ethical considerations
Many of the decisions that a manager needs to take can be considered ethical decisions.
Improving efficiency can be seen as an ethical decision taken in the interests of the society as a
whole, applying service objectives universally and fairly can be seen as an ethically justified
decision, and a consideration of the relative benefits of different groups from services is an
ethically justifiable process as long as it is undertaken to ensure the most ethical distribution of
resources (New, 1996).
ETHICAL ISSUES THAT CAN AFFECT THE OPERATIONAL ACTIVITIES OF
TODAY’S BUSINESS
An ethical issue can be described as a problem, situation or opportunity which requires
individuals, group or an organisation to choose among several actions those which must be
evaluated as right or wrong, ethical or unethical. Hence, an ethical issue from business of point
of view is a subject matter which raises questions about the standards of conduct or behaviours
which are being adhered to by the company separate from the financial motives.
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Business objectives as shareholders value:
Business cannot be ethical, only the managers and corporate strategists can
implement ethics within the framework of the business strategy.Corporate ethics and shareholder
desires for profitability are not always aligned, and it is the responsibility of executive
management to ensure ethics supersede profitability. In its simplest form, corporate ethics is alegal matter. Abiding by laws protecting workers' rights and appropriate compensations is a top
priority for management. Corporate governance and ethics becomes more difficult with the
indirect implications of particular practices, making it important to assess the way in which
certain operations may adversely affect the community at large.Managers are the primary
decision-makers, and therefore must hold themselves accountable for the way in which a
business operates and affects stakeholders, shareholders, employees, and the community at large.
Business objectives as CSR:
Global climate change is rapidly becoming the defining issue of our time (Kirk 2008). The need
for the human race (and by implication for corporations) to deal with the challenges of corporate
social responsibility (CSR) in order to avoid an impending ecological collapse, is succinctly
articulated in the following statement: ―If we insist on ruining the planet, we have to stop
claiming we are a superior species‖ (Berliant 2009).
Ethical decision-making could facilitate strong corporate performance and produce competitiveadvantage, whereas unethical decision-making may result in very different outcomes, including
tarnished brands and crippled bottom lines (Allen 2009). Allen (2009) argues that ethical
behaviour can appreciate over time to provide lasting value, providing an exponential return on
ethics. Stakeholders usually invest their trust in corporations long before investing their dollars
(or Rands), resulting in trust ranking higher than goodwill on the balance sheet. It should be
remembered that the corporate ethical approach adopted will affect the nature, effectiveness and
result of any CSR and corporate governance interventions
2.2 Evaluate the implications for a business and its stakeholders to operate
ethically
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Implications of Businesses Operating Ethically
All businesses have a number of stakeholder groups, each with different interests in what the
business does. Business owners - perhaps the key stakeholders - want good financial
performance from their investments. Business managers know that it is their first responsibility
to deliver good financial results.
However, while it was always acknowledged that businesses exist in a diverse social, economic
and political environment, today it is also accepted that a business should be managed with the
interests of all stakeholders in mind.
Stakeholders of a business:
Shareholders
Employees
Customers, Suppliers and Competitors
Citizens
Bankers, Stock Markets and Financial Commentators
Businesses today have to balance the aims of a number of stakeholders. This is sometimes
difficult because the interests of stakeholder groups can conflict with each other.
E.g. shareholders have a financial interest in the business and want their shares to increase in
value, whereas environmentalists look to protect the natural environment.
If a business successfully launches a new product and all is going well, the shareholders will be
very pleased that their cash investment looks like returning a healthy profit.
If, however, an environmental group mounts a big campaign to prevent this business operating in
the way it does, these two stakeholders are in conflict. Success for environmentalists may mean a
loss for shareholders.
Implication of ethical trading:
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It is about being prepared to look beyond economic objectives to consider the wider
implications of business decisions. From an international perspective, it is becoming increasingly
more important, so if trading overseas (importing and/or exporting), it's important to bear this in
mind. Treat an ethical trading policy as essential, not as a luxury. Business will be ahead of many
others by considering the need for an ethical trading policy early on.
Implication of ethical policy:
Draw up a map or chart of the ethical and ecologically sustainable issues for business will be
focused on. Some examples include:
Fair Trade practices, goods, and services
Sourcing office and sales products from sustainable sources
Using forest products that have been certified by the Forest Stewardship Council (FSC)
Looking after the welfare of all staff in the supply chain
Keeping customers well informed of business practices
Not using bribery or supporting corruption in business dealings overseas
Ensuring animal welfare, against animal testing or vivisection
Having a willingness to help suppliers improve the quality control of their produce and to
improve their own practices (through knowledge transfer)
Making health and safety of all staff and suppliers a top priority
Respecting the environment.
Task 3: Ethics in Workplace Relationships.
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3.1 The role of the company acting as moral agent
A moral agent is anyone capable of making ethical decisions and putting them into action. The
idea that an organization has moral agency stems in part from U.S. Supreme Court decisions
declaring that a corporation is a person in the eyes of the law. That makes an organization
accountable for the predictable results of its actions. In practical terms, this means businesses
have a responsibility to the public to act ethically.
Stakeholder as moral agent:
Ethical values enter management decision-making; it is often suggested, through the gate of
stakeholder analysis. But the suggestion that introducing "stakeholder analysis" into business
decisions is the same as introducing ethics into those decisions is questionable.
The first reply does question the morality (vs. immorality) of strategic reasoning as the ultimate
principle behind stakeholder analysis. It acknowledges that strategy, when placed in a highly
effective legal and regulatory environment and given a time-horizon that is relatively long term,
may well avoid significant forms of anti-social behavior. But it asserts that as an operating
principle for managers under time pressure in an imperfect legal and regulatory environment,
strategic analysis is insufficient. In the Poletown case, certain stakeholders (e.g., the citizens of
Detroit or the residents of Poletown) may have merited more ethical consideration than the
strategic approach would have allowed. Some critics charged that GM only considered these
stakeholders to the extent that serving their interests also served GM's interests, and that as a
result, their interests were undermined.
Moral obligations:
While most companies are equipped to deal with a changing business environment, there is a
stark difference between organic change and that stemming from heavy-handed regulation. To
act blatantly against community interests increases the risk that the ‗rules of the game‘ are
reformed for business, rather than reformed by business.
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Where we tend to struggle is when we have to balance issues of economic growth, jobs and
political interests with activities that impose significant, longer-term costs on community. The
tobacco industry was a case in point, where the ‗rubber band‘ between the two interes ts was
stretched far enough to invoke a harsh regulatory response.
The stoush between the vested interests of the gaming industry and legislators is a flash pointthat highlights the tension between gaming profits and the social cost of gambling addiction. It is
a complex issue and one the gaming industry would prefer to have avoided; it may be asking
itself if it could have pro-actively managed a better outcome. For business, it is a commercial
issue that has moral dimensions. Likewise, emitting carbon is not so much the "greatest moral
issue of our time‖; it is the business issue of our time.
Responsibility versus Accountability of business as moral agent:
The roles taken on by public relations practitioners imply a responsibility to perform certain
functions associated with those roles. Business historian Vincent E. Barry has defined the term
responsibility, when used in business affairs, as referring to ―a sphere of duty or obligation
assigned to a person by the nature of that person‘s position, function, or work.‖1 Responsibility
could thus be viewed as a bundle of obligations associated with a job or function. Narrowly
defined, role refers to a job description, which, in turn, encompasses, but is not limited to,
function. For instance, a practition er‘s role may be that of media relations. Function would refer
to the specifics of the job, including press release writing and dissemination, as well as the
maintenance of good media relations.
In this sense, responsibility refers to more than just the primary function of a role; it refers to the
multiple facets of that function — both processes and outcomes (and the consequences of the acts
performed as part of that bundle of obligations). A responsible actor may be seen as one whose
job involves a predetermined set of obligations that must be met in order for the job to be
accomplished. For example, the primary functional obligation of someone involved in media
relations is the same as cited in the foregoing sentence: to maintain a good working relationship
with the media in order to respond to queries and to successfully work with them to ―get out the
message.‖
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3.2 Analyse the development of mechanisms for achieving employeeinvolvement and empowerment
Empowerment is the process of enabling or authorizing an individual to think, behaves, take
action, and control work and decision making in autonomous ways. It is the state of feeling self-
empowered to take control of one's own destiny.
When thinking about empowerment in human relations terms, its better avoid thinking of it as
something that one individual does for another. This is one of the problems organizations have
experienced with the concept of empowerment. People think that someone, usually the manager,
has to bestow empowerment on the people who report to him.
Empowerment in organization:
Empowerment is the process of enabling or authorizing an individual to think, behave, take
action and control work and decision making in autonomous ways. It is the state of feeling self-
empowered to take control of one's own destiny.
When thinking about empowerment in human relations terms, try to avoid thinking of it as
something that one individual does for another. This is one of the problems organizations have
experienced with the concept of empowerment. People think that someone, usually the manager,
has to bestow empowerment on the people who report to him.
Consequently, the reporting staff members wait for the bestowing of empowerment, and the
manager asks why people won't act in empowered ways. This led to a general unhappiness,
mostly undeserved, with the concept of empowerment in many organizations.
Employee ownership:
Consult your employees and determine what decisions they face on a daily basis that they do not
feel empowered to make. Give them specific boundaries of what they can and cannot managewithout oversight and then share with them the logic of how these decisions should be made. If
you want cashiers to manage discounts, educate them on pricing strategy and overall business
finance, showing them how discounts can affect overall business performance. Being transparent
about how your business is run and your goals and concerns helps employees understand how
the decisions they make impacts the entire business.
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Empowerment does not happen overnight and a set of new rules will not be enough to transform
your place of business. First and foremost, you must truly see the value of empowerment, be
willing to change the way you operate as a business owner. Take the time to listen to your
employees and find out what sort of empowerment they need to do their job better. Second, you
will set appropriate boundaries and give employees the tools they need through training and
development. Finally, make empowerment an ongoing vision of your company and continually
look for ways to develop ownership in each and every person that you hire.
Task 4: Current ethical issue in a business.
4.1 C ethical issue affecting McDonalds:
McDonalds being the world's largest hamburger chain fast food restaurant owes the environment
a lot in terms of its Corporate Social Responsibility. The environment in this case implies its
customers, business partners as well as the public at large. The firm has played a large role in the
past towards conserving the environment.
McDonald's core values are all aimed at promoting the Corporate Social Responsibility of the
firm. This is achieved through giving value to the customers, the supply chain as well as the
other business partners with whom McDonalds does business. McDonalds indeed acknowledges
the fact that its customers are the reason behind its success and existence. Therefore, the
customers are very much valued within the company. The company thus strives to create a warm
and welcoming environment for its customers.
Secondly, McDonalds values its employees and states that it is committed towards the career
growth and development of its employees through a comprehensive training plan. This is perhaps
the greatest CSR that McDonalds has. McDonalds believes in empowering and valuing the
employees for increased commitment from them and their continued success.
Current Ethical Issues:
One of the main ethical criticisms consistently faced by McDonald's over the last 30 years relates
to the food offered in its stores. Critics claim that McDonald's is a major contributing factor to
the ever-increasing levels of obesity in the U.S. and other developed countries. Medical studies
show that 'waistlines are expanding faster in the UK than in any other European country...with 1
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in 5 adults dangerously overweight' (Walsh, 2003), while in 2001 it was reported that 300,000
deaths a year in the U.S. are related to obesity compared to 400,000 through cigarette smoking'
(McMans Depression and Bipolar Weekly, 2004). McDonald's contribution is a result of the
unhealthy nature of fast food.
Stakeholders in a corporation may not only be human because animals are also seen as animportant part of society and deserve the same treatment as humans. McDonald's has been
criticized for the way it treats animals before they are killed and turned into fast food. 'The
corporation is the world's largest promoter of meat-based products, the largest user of beef and
the second largest user of chicken' (McSpotlight.org: McDonald's and Animals, 2005), and thus
is faced with the usual claims aimed at slaughterhouses. It is claimed that 'chickens were
crammed into sheds with less than one square foot of space per bird and no daylight' (Inside the
McLibel trial, 1995).
McDonald's also 'annually produces over a million tons of packaging used for just a few minutes
before being discarded' (McSpotlight.org: Environment, 2005). Traditionally a number of ozone
depleting gasses were used in polystyrene foam packaging. In the 21st century, McDonald's uses
almost all recycled packaging. However, the company still faces criticism due to the amount of
waste it produces.
The range of ethical criticisms leveled at McDonald's throughout the world has been well-
publicized. However, many of these issues were first raised in the 1970's before tighter
regulation was imposed and unethical behavior became a hot topic. After 30 years of criticism, it
is important to look at what measures McDonald's has taken to improve its ethical conduct and
how far this has been successful.
Community responsibility
For ages, McDonalds has been supporting the Olympic Games through feeding program aimed at
feeding the athletics. McDonalds is also involved in various charities and also supports educationin the developing countries where it has its franchises and fast food restaurants. As part of its bid
to return back to the society, McDonalds has sponsored several children programs involving
eradication of illiteracy and poverty.
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McDonalds also sponsors a number of events worldwide including the Olympic Games and
walks. Over the past calamities, McDonalds has been involved in disaster response where it has
supported the victims of such disasters. Just recently during the Haiti disaster, McDonalds
moved in to donate a handsome amount towards the rebuilding of the destroyed country.
According to Morris, Willey and Sachdev (p.54), McDonalds has also supported various
community based programs such as sponsoring the education of poor children in India and Asia.
Diversity:
A manager should develop a competency to understand the cultural diversity and deal with it.
Psychological maturity and Self-awareness are 2 competencies that a manager has to essentially
develop to face the circumstances in the present environment (Harris & Kumra, 2000). Many
researchers have suggested ways in which a culturally diverse workforce should be dealt. Conejo
(2001) has suggested steps to dealing with problems faced by managers due to culturally diverse
workforce. They are to determine the diversity, explore the patterns, identify the characteristics,
establish a sequence of action & share the ideas.
Rijamampianina & Maxwell (2002) have designed a little more sophisticated 4 step process to
manage a culturally diverse work force. The steps are motivational process, interaction process,
visioning process and learning process.
Toledo‘s (2008) rules to solve a conflict without allowing the cultural disparity to come into theframe of action are to solve the problems as quickly as possible, avoid taking emotional
decisions, talk only to people who are involved, listen, plan & do not give charge to anyone else;
Solve it yourself. But there are quite a few backlashes to this kind of approach though it might
look very promising. Sometimes if the conflict is very aggressive, it should be given some cool
down time; an attempt to solve it as soon as possible might only aggrevate it. Sometimes line
managers tend to take the decisions by themselves without furthuring the issue to the higher
authority, and they often take wrong decision due to a lack of understanding of the cultural
background.
Environmentalism:
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There are a variety of aspects about the corporation of McDonalds that have resulted in negative
impacts on society. These impacts span from a wide variety of health risks, exploitation of
foreign and domestic labor markets, environmental drawbacks, and the issues with globalization.
McDonald‘s promotes their food as nutritious; however, it is far from being healthy food. Thereality is that it McDonalds food has many negative effects on the human body because it is
contains ingredients that are high in fat, sugar and salt, and low in fiber and vitamins. Despite
their efforts to include nutritious substitutes on their menu the problem still persists. A diet of
this type is linked with a greater risk of heart disease, cancer, and diabetes. McDonalds contains
many chemical additives, some of which may cause ill health, and hyperactivity in children.
Labour Issue:
Throughout the corporation there are large problems with labor exploitation and the low wages
that are paid to their labor force, these low wages counteract with the rising cost of living
throughout the world. McDonald's franchises often times do not pay overtime rates even when
employees work very long hours. This usually results in a lowered incentive to work. McDonalds
tends to be understaffed because there is pressure to keep profits high and wage costs low. This
results in their workers to work harder and faster for less money. As a consequence, accidents,
particularly burns, are common. The majority of employees are people who have few job options
and so are forced to accept this exploitation, and they're compelled to remain ―happy‖. Not
surprisingly, staff turnover at McDonald's is high, making it virtually impossible to unionize and
fight for better deals, which suits McDonald's who have always been opposed to Unions.
4.2 How to improve ethical issues in McDonalds:
McDonalds has been able to achieve high success through its identification of the elements that
make it succeed most. These elements include its employees, customers and the suppliers.
McDonalds values its employees and has various training programs to support their bid towards
an excellent service provision. The company draws its success mostly from its employees.
McDonalds also hires quality and highly valuable employee's thus ensuring continued success
for the company.
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McDonalds also draws its success from its highly valued customers. The company provides the
customers with nutrition information thus ensuring that the customer makes informed decision.
Moreover, the firm develops well balanced diets that meet the dynamic requirements of each fast
food market. Indeed, customers have enabled the firm to develop strongly with most customers
referring others to the fast food giant. The customers also benefit from the advice of the
international nutritionists as well as the nutrition experts that are dissipated to McDonalds on a
regular basis (Daft and Marcic, p.11).
Code of Ethics:
Contribution of environment:
McDonalds should support for the environment has ensured that its CSR continues to grow. The
firm has many ways of giving back to the community. McDonalds supports various sponsorship
programs, the most profound being that which supports the education of children (Carter and
Clegg, p.48). McDonalds also feeds the athletes at the Olympic Games. Poverty eradication has
also been a priority for the company as it seeks to improve the standards of living.
Contribution to employees
McDonalds has a policy within all its subsidiaries and fast food restaurants worldwide of giving
its employees a priority over all other things. The firm indeed identifies that employees are core
in the company's success. McDonalds has in the past devised training programs aimed at
employee development. Moreover, the firm empowers its employees to take up new challenges
in the fast food market.
Furthermore, McDonalds supports human rights which forms part of it global business conduct.
Respect to life and the preservation of human dignity has enabled the company to excel in its
core relationship with its employees as well as customers and business partners. This has enabled
McDonalds to grow through its appreciation of human life and dignity, an area where many other
companies have failed.
Recommendation
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McDonalds should make us of solar energy, which is a renewable form of energy. This will go a
long way towards ensuring that there is less carbon emission. The EPA would thus be pleased
with the efforts propagated by McDonalds.
McDonalds should also run advertisements in the media to promote its balanced healthy diet.
The advertisements should also contain nutrition advice on various ways of eating healthy fastfood diets. The firm should also diversify its diets to ensure that it meets the requirements of
different ages.
4.3 Design a suitable ethical code
A code of ethics is a collection of principles and practices that a business believes in and aims to
live by. A code of business ethics usually doesn't stand alone, it works in conjunction with a
company's mission statement and more specific policies about conduct to give employees,
partners, vendors, and outsiders an idea of what the company stands for and how it's members
should conduct themselves.
The key in distinguishing a code of ethics from these other documents is to hit the right level of
specificity. It should address both the particular nuances of the company's industry as well as its
broader goals for social responsibility and should be concrete enough to serve as a guide for
employees in a quandary without laying out rules for every situation that could arise. Policies can
include issues such as a company's commitment to not work with vendors who use child labor or
are environmentally harmful, not discriminating in their hiring, and not taking bribes.
"A code of ethics is about corporate culture," says Michael Connor, the editor and publisher of
the online magazine Business Ethics . "[Many small- to medium-sized businesses] have a code of
ethics; it's probably not written down in many cases but it wouldn't hurt if it was." Connor
believes that there's no such thing as a business being too small to benefit from a code of ethics.
Having a code is "often viewed as a luxury or something that is an added cost," he says. "Thereality these days is that the business that does not have a code of ethics subjects itself to a much
greater risk in its day-to-day operations and if there is an unfortunate incident, they expose
themselves to much greater risk from regulatory and prosecutorial authorities."
Suitable ethical code could be as follows:
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Foster the highest ethical standards amongst MacDonald personnel.
Be effective in preventing, detecting and appropriately reporting and addressing anyallegation of misconduct and violations of law by MacDonald personnel.
Comply with government procurement laws and regulations. Standards of FederalBusiness Ethics and Conduct apply to MacDonald employees, as well as third parties,acting on MacDonald behalf in support of the US Federal business.
Set forth the standards and practices that MacDonald suppliers are required to uphold.For instance, ensuring environmental certificate, non use of child labor, compliance inHR management etc.
Provision for health and medical support to the employee of MacDonald.
Support education of child, poverty reduction and charitable health care agencies globallyfor their health awareness program related to food habit.
Set forth the policies and make sure that MacDonald‘s personnel are non smoker and nonalcoholic.
Environmental responsibility
According to Kotler and Lee (p.19), McDonalds has won the Energy Star Partner of the Year
award which is usually awarded by the Environmental Protection Agency (EPA). McDonalds
has been recognized for its massive efforts in reducing greenhouse emissions. The firm is
sensitive to the environment and concerned more about the global warming. This has promotedthe firm to save on energy and thus avert carbon emissions.
McDonalds should take its social responsibility concerning the environment seriously. The firm
established its very own Global Environment Commitment (Houk and Williams, p.134). The
company has continued to focus on improving its commitment towards the environment. As far
as McDonalds CSR regarding the environment is concerned, the fast food giant has in the past
and present focused on three main areas namely; energy efficiency, sustainable packaging and
waste management as well as green restaurant design. McDonalds has sort to use more energyefficient strategies such as the use of natural gas in the fast food restaurants. McDonalds
continues to seek ways of increasing energy efficiency. Furthermore, the fast food giant also
seeks to reduce the impact of its operations on the environmental impact.
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Reference:
Carter Chris and Stewart Clegg. Business ethics as practice: representation, reflexivity and
performance. Amsterdam: Edward Elgar Publishing, 2007.
Daft Richard L and Dorothy Marcic. Understanding Management. 6th ed. Edinburgh: Cengage
Learning, 2008.
Ferrel O C, Linda Ferrell and John Fraedrich. Business Ethics: Ethical Decision Making and
Cases. 6th ed. Melbourne: Dreamtech Press, 2005.
Fisher Colin and Alan Lovell. Business Ethics and Values: Individual, Corporate and
International Perspectives. 3rd ed. New York: Prentice Hall, 2008.
Gitman Lawrence J and Carl McDaniel. The Future of Business: The Essentials. 4th ed. New
York: Cengage Learning, 2008.
Hanekamp Gerd. Business ethics of innovation. Paris: Springer, 2007.
Hartman Laura P and Joseph R. DesJardins. Business Ethics: Decision-Making for Personal
Integrity and Social Responsibility. California: McGraw-Hill/Irwin, 2007.
Hoffman W. Michael. Power and responsibility in the American business system: proceedings
of the second National Conference on Business Ethics. California: University Press of America,
2008.
Kotler Philip and Nancy Lee. Corporate social responsibility: doing the most good for your
company and your cause. Washington: John Wiley and Sons, 2005.
Malachowski Alan R. Business Ethics: International and environmental business ethics. Berlin:
Taylor & Francis, 2001.
May Steve Kent, George Cheney and Juliet Roper. The debate over corporate social
responsibility. Cambridge: Oxford University Press US, 2007.
Morris Huw, Brian Willey, and Sanjiv Sachdev. Managing in a business context: an HR
approach. New York: Financial Times Prentice Hall, 2002.
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Ethical corporate governance http://www.icharter.org/articles/ethical_governance.html , Accessed
on 28 September 2013
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