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Laura Awofisayo (21044229-1)
Btec ND in business yr 2 gp 3
Elizabeth and Yaw
Unit 26: BUSINESS ETHICS
This assignment requires me to select a firm and investigate the business and its ethical dimension.
I must also write a report addressing the following tasks:
For this assignment, I have chosen to use a company called ‘British American Tobacco, the reason why I chose this company is because they are familiar to me and I believe that they are involved in the ethical issues within the business and the employees working there as well as the customer.
British American Tobacco has been in business for more than 100 years, trading through the turbulence of wars, revolutions and nationalizations as well as all the controversy surrounding smoking.
The business was formed in 1902, as a joint venture between the UK’s Imperial Tobacco Company and the American Tobacco Company founded by James ‘Buck’ Duke.
Despite its name, derived from the home bases of its two founding companies, British American Tobacco was established to trade outside both the UK and the USA, and grew from its roots in dozens of countries across Africa, Asia, Latin America and continental Europe.
They were ‘born international’, and have developed over a century’s expertise in operating locally in diverse cultures around the world.
‘Ours is the world’s most international tobacco group, with quality brands sold in more than 180 markets and a responsible approach to doing business from crop to consumer’. That means their company is he world’s ,most international tobacco, with high quality brands which is being sold in more tan 180 markets around the world and they are a responsible approach to doing business from collect crop then direct to the consumer.
Their aims are to:
To make profit: This is the company’s number one aim, this company try as they can to make as much profit as possible, whereby profit is an reward to the owner for running their business successfully. This aim can be achieved depend the way the company promote its products or services.
To survive: this is the company’s another main aim which its to survive, many businesses including British American tobacco aims to grow by expanding their sales or profit as quickly as possible. For the business to survive the business will need to catch the attention of customer as they always do and this will eventually help the company to gain more capital to survive this business.
To provide a competitive service: this is the company third aims, as they try their best to offer a better service to their customer more than their competitor; this is when the business is seen as competitive market. They try to offer a wider variety of products or make it very easier for their customers to buy them.
To maximising sales or quality: this is the company’s other aim, this can actually put the business in a strong position in its market. They try to maximise the quality of their products and how are they made. This should then lead to particular products; if their customers are satisfied with the product then this should improve the reputation of the company.
To increase their market share: many business aims to increase its market share, because they are the total market sales that are made by the company. Market share is being calculated by a figure which is the total value of all the sales made by all firms in the market during one year.
Their objective is ‘to grow their brands and the value of the business, to improve productivity and to embed the principles of corporate the responsibility around the groups’ This means that they want to grow more on their brands and the value of their business, to improve their product and to allow the principles of corporate the responsibility around the groups.
Task 1 a
Identify and describe possible ethical dilemmas resulting from the pursuit of business aims by your selected organisation
What are Ethics?
Ethics are the moral principles that should underpin decision-making. A decision made on ethics might reject the most profitable solution in favour of one of greater benefit to society as well as the firm. Ethics is also a code of behaviour people believe to be morally correct.
What is an ethical dilemma?
An ethical dilemma is a situation that will often involve an apparent conflict between moral imperatives, in which to obey one would result in transgressing another.
Ethical issues at British American Tobacco plc
The main aim of business is to make profit but to make profit companies should not cause harm or be the reason of causing harm due to their activities. If these kind of activities takes place for the focusing on individual pursuit of profit, human’s social needs to become ignored and this is not ethical. For example, British American Tobacco needs to make profit, but it is the way that profit is made which is under fire. The ethical issue that the company must face is to continue making money while aligning its values more closely with those of the society where it operates.
The main ethical issues the British American Tobacco is involved with people smoking, thinking that it’s helping them. The ethical issues that BAT needs to consider are as following:
- Passive smoking
- Smoking mother
- Smoking at work
- Public places
- The Government
- Addiction of human being
Passive Smoking is one of the ethical issue that BAT must consider for example because this also effect non smoker as they complain of eye irritation, headaches, dizziness, nausea and aggravated asthma which is causing by the people who smoke and passive smoking to the non smoker.
Asthma is another ethical issue that BAT must consider, for example because they are exposed to high level of smoking, which showed no reactions. for example if a patient is working in the smoking area, she will become tight with wheezing and asthma that she could not get her breath for which there is no medical evidence linked to 34million cases.
This is another ethical issue the BAT must consider, in order for them to achieve its aim and objectives, for e.g. pregnant women who smoke increase their risk of miscarriage and 3,800 low birth weight babies are born each year, due to smoking mothers. There is a 50% increased chance of a baby developing respiratory disease, reduced lung function and chest infections in later life, due to nicotine passing through the umbilical chord.
This is another ethical issue that BAT must consider, in order for them to achieved its aims and objectives. For e.g. “One third of children who try smoking in primary school start smoking” and “one in five schoolchildren under 16 is a smoker”. The earlier the starting age of smoking, the more damages they do in their health later in life. It is illegal to buy cigarettes under the age of 16, when children should make their own decisions.“Smoking is a social prop for children who are insecure”. Children idolise celebrities many of them publicly contributing to adolescent smoke on screen. Children who start smoking don’t think they’ll be smoking for life
Smoking at work
This is another ethical issue that the business must consider for example one employer made smokers work extra hours to make up for the breaks compared to non-smokers. Smokers take paid leave for smoke related illnesses, amounting to £6 billion.
Companies have introduced smoke free areas for a safe, healthy working environment, as the harmful effects from smoking are widely recognised and employers are liable for damaged health caused to non-smokers by smoke
This is another ethical issue that the company must consider in order for them to achieved its aims for example, Smoking is banned from many public places including public transport, hotels and bars “leaving only the home where someone else is at risk” 80% of Europeans voted for protection from smoking in restaurants, but if banned “£346 million could be lost in income as well as 45,000 jobs.” ‘Restaurants should have the right to decide the policies they want in order for them to help reducing smoking.’
This is another ethical issue that the company must consider in order to achieve their aims for example, the Government taxes cigarettes amounting to 79% of the total cost in the UK. Out of every 100 cigarettes sold world wide, the Governments sell 55, and tax half of the remaining 45 cigarettes. Governments, “never encourage the complete ban of cigarette consumption due to the profit they make”.
Besides avoiding harming or giving harm, companies have to be trustworthy and stand behind their promises. Turning back to tobacco companies, the products they produce are also harmful and it is one of the key reasons of causing deaths. However I have research that smokers themselves are either mostly or completely to blame for the health problems faced by smokers in the UK. Only 25 percent said that the tobacco industry was either completely or mostly to blame.
Most of the company say that smokers are to blame for their own problems, with just 26 percent saying that the tobacco companies are mostly or completely to blame. Fourteen percent said both are to blame equally. In my another research, I have found out that similar industry are not generally blame for causing death, they thought that the only people who are to be blame are the ones who buy them and they are also responsible for this kind of activities and deaths
Ethical dilemmas of British American Tobacco plc
One of the business’s objectives is ‘TO PROMOTE AND IMPROVE PRODUCTIVITY’.
There are ethical dilemmas that the business will go through when trying to achieve these objectives. These are:
- Should Tobacco companies put their cigarette logos on t-shirts, hats, backpacks and other consumer items popular with children and among adults?
I believe that this kind of activity is legal to young people, but it is profitable to the company. However its cost the industry little but it enables them to make new customers addictives to their products.
- Should Tobacco gives free samples especially in the places for the young people like shopping malls, rock concerts and discos?
I believe that this kind of activity is not fair to the young adults but its can be profitable because disco, rock concerts and other events are popular to young adults so what the industry is trying to say is that the industry is always with the young adults, in all conditions to make customers to remember them and keep them in their mind.
- Should Tobacco industry link their products to the customer’s health?
I believe that this kind of activity is not right and not fair to the customer but it’s profitable to the business because many people smoke for different reasons, and one of them is to keep them slim whereby it’s damaged their health. The company should be aware of what they are actually doing and should do everything they can to stop people smoking because it is not ethical for this company to sell tobacco just like that, but meanwhile the company is making more profit to damaged people’s health and I still believe that it is not fair.
Smoking is one of the key problems for all the inhabitants around the world. Tobacco producers are generally very big companies and they have huge effect on countries economies and also in media. As most of the other companies do, they are making profit and trying to fulfill the demands of their customers.
However, their products are directly the main reason of many deaths. The actions they made, the words they said, are not fitting what they have to do. None of them can be explain in terms ethical. But the thing is, really are they responsible from these consequences or their customers. It is human’s responsibility take care of their life and health. These companies are not pointing gun to their heads to start smoking. Mostly customers are choosing this way but it is definite that tobacco companies are indirectly pushing them for smoking.
Using examples, analyse reasons why the pursuit of business aims by your selected organisation may result in ethical dilemmas
The main aim of British American Tobacco is to make profit but to make profit companies should not cause harm or be the reason of causing harm due to their activities. If these kind of activities takes place for the focusing on individual pursuit of profit, human’s social needs to become ignored and this is not ethical. For example, British American Tobacco needs to make profit, but it is the way that profit is made which is under fire. The ethical issue that the company must face is to continue making money while aligning its values more closely with those of the society where it operates
There are many effects of producing tobacco to the public when the business try to achieved its aims but if the business want to be trustworthy, then they will need to be consider of passive smoker, asthma, causing children to smoke and many other things that are causing by the company.
It is obvious the companies objectives is to make profit as well as maximising its sales but on the other hand of it, the company’s output which is their product are harmful to the public
Many young are not suppose to be smoking tobacco, but yet they are still doing it as a fashion or as a way of keeping them calm when they are overstressed. On the other hand its effect the community as the community will have to pay huge taxes to the government; it’s also effect the government as they will have collect the money from the company, in terms of taxes which they will be able to get money to treat the cancer patients.
The government is planning to raise the funds to treat cancer patients by trying as much as they can to collect money from the industry in terms of taxes. They are delivered the election commitment to help reduce the burden of cancers
These funds would be use for the following:
- develop and implement training courses for cancer nurses
- improve professional development for cancer professionals, counsellors and general practitioners
- develop and implement mentoring for regional cancer services
- improve support for those newly diagnosed with breast cancer
- increase cancer research
- enhance cancer screening and awareness
- support cancer clinical trials
- build cancer support groups
- support children with cancer and their families
- enhance palliative care programs
- improve the early detection and management of breast cancer
- establish a new national cancer agency, Cancer UK
- establish a national research centre for asbestos related diseases
- provide additional radiation therapy internships and undergraduate places
- redevelop the children’s cancer ward at Royal Children’s Hospital
Using examples, evaluate the consequences for stakeholders of business activity
From the profile of the company, I am now going to say what are the benefits of its output products which are Tobacco and then I am going to say what are the consequences to its stakeholders such as Government, shareholders, customers etc.
Benefits of tobacco
The benefits of tobacco are evident for the farmers who use their land for tobacco growing. These farmers reap the benefits of tobacco through the sales and profits of tobacco to manufacturers of pesticides and cigarettes and other tobacco related products. Farm families also enjoy the benefits of tobacco. Often the earnings from the sales of the tobacco grown on their farmlands are the only source of income for the feeding and clothing of these families.
Nicotine is made of dried leaves of the tobacco plant. Nicotine is a mild stimulant to the nervous system. Some of the short term effects of nicotine include increased pulse rate and blood pressure due to constricting of the blood vessels, helps some people to concentrate, relaxation, reduces anxiety. Many young women turn to tobacco use because tobacco increases the metabolism rate of the body and suppresses the appetite. This is the main affect of tobacco that attracts all young women.
Research has shown that it takes a long time of constant smoking to actually become dependent on the nicotine. People like the affects of the nicotine and get used to it which causes them to desire more. Much of the dependence of nicotine is psychological. Smokers think that they need tobacco to rest, relax, reduce anxiety, and control their appetite, because they use it so often to control these problems that they begin to think that smoking is the only way to be in control. This is where the dependence begins for many people.
There are a lot of jobs throughout the world which depend on tobacco and cigarettes. Without tobacco, many people in developing countries would be out of jobs. Tobacco is important to the economy in terms of growth and development to the UK and some
Consequence on its stakeholders
There are primary and secondary stakeholders around a company. Primary stakeholders are employees, customers, shareholders and suppliers. Second stakeholders can be explained as media, government, environment and other groups which are interested in business.
Regarding to tobacco companies, all these stakeholders are also around companies’ environment. Take BAT as an example. They have responsibility to their customers.
As a company they are responsible to fulfil their demands. They need to continue producing their products to not loose their customers and also adding new ones to their customer portfolio. It is obvious that first reason of running business is making profit. No money means no business (Fisher and Lovell 2003). The other primary stakeholder is shareholders. This group can be explained as the real owners of the company who give money and time to run business smoothly and continuously. In case of any problem, they will be affected by the situation. In terms of employees,
BAT employs thousands of employees around the world. BAT’s profit rates, business situation also affects them. If business starts having some problems in terms of making profit or loosing reputation, this group will be under risk of loosing their business and they begin to worry about their future and also same problem will affect suppliers and their relationship with the company. In the opinion of Green (1993) all these bonds, stakeholders, primary or secondary, they are always link together and none of them can be thought separately.
As secondary stakeholders, in terms of tobacco companies, they are under a huge pressure from government, media, environmental and other related groups.
Especially in developed countries, governments are restricting their activities in many areas such as in media advertising and increasing the taxation rates for these kinds of companies. Moreover, media and other groups which are interested in situation are making propagandas all around the world to lower down the sale rates of tobacco companies. Recently, these activities definitely effect the company’s reputation and in worldwide. The number of adult smokers reduces by some 1 percent a year (www.no-smoking.org).
Tobacco companies are now trying to make profit and also trying to face up with the problems that their secondary stakeholders would make up. They are producing cigarettes which kill people but on the other side, they are featuring many opportunities to employees, governments and to their suppliers.
Furthermore than these points, British American Company announced that, they are making huge investment on health sector and they are building hospitals and related health institutes all around the world to fulfill their social responsibilities. (www.bat.com).
Identify and describe the ethical consequences of business activity for the employees of your selected organisation
I am doing task to identify and describe the ethical consequences of business activity for the employees of my selected organisation Ethics are the moral principles that should underpin decision-making.
Businesses are required to operate as ethically. The following guidelines are helpful to understand activities that may raise ethical issues:
Is our action profitable? For example, if a business is selling an alcohol and they sold it to the customer who is already drunk. I believe they are making money out of it, but it is not fair because the person is damaged his or her health if they drinks too much.
Is it legal? For example if a business have a lots of products in their warehouse, and they are expiry today and they decide to use the database to change the date, just for the business to get rid of all the goods that the business is keeping. I believe that it is legal, as their customer will get poisoning, whereby they are making money at of it.
Is it fair? For example if the business buys cheaper products from a poor Kenyan’s farmer and produce coffee and sell it back to him at exorbitant making more than 800% profit. I believe that this is not fair because the Kenyans farmer is poor and will not have money to pay for the coffee and not only that the Kenyan’s farmer is the one that produce the products.
Is it right? For example, if a business pays its employee’s salary by cash, then it is ethical and it is not right because its affect the business in a way that the employees will not have to pay tax, when they received their wages or salaries and the employees may be paid below their minimum wages.
I am now going to identify the six consequences on employees and what are the impacts on the employees
The six consequences that I am going to use on this task which are:
- Equal opportunities
- Fair payment
- Health and safety
- Training and staff developments
- Working hours
- Issues affecting the privacy of the employee
Under the employment law, they states that a person applying for a job is not allowed to be discriminate against by an employer just because of their:
Sex or gender
Equal opportunity is the common belief that everyone has an equal chance to achieve their potential and equal access to health, education and job opportunities.
The equality of opportunities also tries to minimize disadvantages that an individual or a group may experience due to their social status, gender, sex orientation, religion etc…
If the business did not provide equal opportunities policies, they will be a huge impact on both the staff and the business. For example if the staff thinks that they may have been discriminate against, they can simply complain to the Equal Opportunities commission who will then review their case. If the company is found guilty then they can be prosecuted and forced to pay compensation to the person who has not get the job under the cause of being discriminate.
Another impact would be that the staffs would not want to work there for example because of the racism, sex, gender and many more. This have the impact on the employees, as when there is racism at the workplace, then the employee will leave the company and the company will be seen as a bad reputation and this can lead to the company closing down or even face court.
Under the law of fair payment or payment of minimum wages, this says that the company should pay their employee the minimum wages. The impact on the employees would be that they do not have to pay taxes, and the government is expecting the taxes every year. Another impact would be that it is illegal for the employees to accept under payment
Health and safety
This is the most important law that the business must follow, to ensuring the safety, health and welfare of employee engaged in work or employment.
There are huge impacts on the employee if the business did not follow this law. One of the impacts on employees is that they wouldn’t want to work there and lot of accidents will be happening at the workplace. Another impact would be that the employees will wants to leave the job and would rather work elsewhere, where they feel safe working in the environment.
Another impact on employees would be that the accident at work would lead them to stay at home and getting sick pay or compensation from the government.
Training and staff developments
Every businesses or organisations should provide the employee training and staff development so that they will know their job well. The impacts on employees is that if the business did not provide training, then the employees that don’t have any qualification to do the job, will not be able to do the job well or even know what to do when they are given a job.
Other impacts would be that the company will experience high staff turnover that means the employees would be leaving the company frequently and would also lead them to having low generations of new ideas and innovations.
Another impact might be that the employees will not be able to work elsewhere if they want to, because they lack of skills or experience.
The law states that employers must provide their staff 11 hours rest per shift and should be given 48 hours maximum working hours per week. Employee that works 5 days or 6days a week should be given a minimum 4weeks annual paid leave.
The impact would be that if the employer did not provide according to the law, then the employees may think that they are being taken for granted and might want to leave the job.
Another impact may be that if the employees is working overtime and are not be paid then it is ethical issues, because then again, the employee may feel that they are taken for granted and this may lead the business into court or even to close down the business.
According to the law employee should also not be made to work for more than two weeks without a document called ‘an employment contract’ just to ensure job security.
A whistleblower is and individual that believes that his or her organization is engaged in or wilfully permits unethical, unlawful or otherwise reprehensible activities. In simpler words, a whistleblower is someone who snitches on his or her company.
Some people might wonder why somebody would do such a thing. To me, a person who whistles blows is definitely someone who has strong beliefs in his or her own ethics. It takes a lot of guts to expose a company’s darkest secrets. A whistleblower would surely be in a moral dilemma before he or she whistles blows because there would be many mixed reactions from different parties. A whistleblower has to choose between professional obligations and personal obligation.
A whistleblower must face many risks like harassment from the bosses and top managers and maybe other employees, losing his or her job and the list goes on. That is why I think that a whistleblower is someone with strong personal ethics and believes in the freedom of an individual to speak up.
This has a lots of impacts or affect on the employers for example if a employee is doing fraud to the company and put it on someone else, then it is an ethical issues because, it’s the employer’s responsibility and shouldn’t put it on someone else’s and beside it is also means to me which is calls ‘ Whisleblowing’.
Every employer must provide their staff equal opportunities so that their employees will feel safe working in the environment without being discriminated because of their sex, gender, disability and religion. This can lead the business to be seen as a good image and many people would want to work there.
Every employer must also provide fair payment to their staff, so that the staffs will not feels that they are being taken for granted. For example if the staffs are asked to work overtimes, they should be paid for that because it is illegal for the employee to accept underpayment. But if the business does that, these will the business as a bad reputation.
Every employer must ensure health and safety in the workplace so the employee will feel safe working in the environment and if the employer does not provide health and safety, the company will be seen as doing unethical behaviour and it is really important that the company must follow this law to ensuring the safety, health and the welfare of the employee engaged in work or employment.
Every employer must also provide their employee free training and staff developments as this ensure that the staff know their job well, if the employer fail to do this, then the employee will leave the job and work elsewhere where they provide them free training and staff developments.
They must also provide flexible working hours so that the employees will not feel under pressure and the employer must follow the law which states that they must provide their employee 11 hours rest per shifts and if the employees increase the hours, this will make the company as unethical because they did not followed the law. So for the business like BAT, they should be able to know that they have to provide their employee all of these four as mention and the business will be seen as good image and ethical.
Identify and describe the ethical consequences of business activity for the consumers of your selected organisation’s products or services.
Laws/legislations that protect customers
Sales of goods act 1979 as amended by the Sale of Goods (amendment act 1994, sale and supply of goods act 1994 and sales of goods (amendment) act 1995 and supply of goods to consumers’ regulations 2002.
This law states that all goods sold, whether new or second-hand, must be:
- As describe
- Of satisfactory quality
- Fit for the purpose for which they are intended
The goods must also be fit for any specific purpose the buyer has made clear.
If these conditions are not met the seller must refund the buyer or, if reasonable, allow the buyer to opt instead for a repair or replacement. A free repair can be offered but if this is not satisfactory the buyer still has the right to a refund. Sale goods are also covered, unless the fault was clearly obvious or pointed out at the time of sale and the
Reason for reduction.
Faulty goods can be returned by post if this is more convenient, or the customer can ask the shop to collect at its own expense. All goods posted by a supplier are at the seller’s risk.
Consumer protection act 1987 this act relates to price and safety. Under this act it is an offence to:
- Mislead customers as to the price if any item
- Mislead consumers over sale prices and exaggerates price reductions
- Supply goods which are not reasonably safe. In 1994, this aspect of the act was strengthened by the General Product Safety Regulations.
Consumer Credit Act 1974 This act controls consumer credit. Most businesses that offer loans for customers must be licensed. Retailers who arrange customer credit through a finance company need a different licence.
The Act also:
- Requires lenders to state the true cost of loan including the total charge of credit, the Annual Percentage rate (APR) and the cash price of the goods.
- Protects borrowers against unfair deals and extortionate interest rates.
- Enables borrowers to claim compensation from finance or Credit Card Company as well as the supplier if the goods are faulty and cost over £100. This can be very useful if the seller has ceased trading or the goods were bought overseas
- Gives a cooling-off period for up to seven days to borrowers who sign a credit agreement in their home.
- Prevents lenders demanding early repayment or trying to change the terms of an agreement without notice
- Enables customers to find out the information held on them by a credit reference agency for a small fee for retailers to provide details of the name of any CRA used to ascertain their credit rating.
Under the Act the wording of any advertisements promoting credit must be truthful and accurate with appropriate warnings, especially if the loan is to be secured on the borrower’s property.
Trade Descriptions Act 1968 This act makes it a criminal offence to give a false or misleading description of goods or services, for example:
- Selling goods which are wrongly described by the manufacturer
- Wrongly describing goods
- Making false claims for services, accommodation and facilities
Usually the spoken word of the seller overrides the written description of the goods, as the buyer can rely on the expertise of the salesperson. However this can be difficult to prove if there is a dispute.
The case can be reported to a Trading Standards Officers who could prosecute the firm concerned. Private individuals cannot do this.
A business who sells cigarettes are obvious but can be very serious cases, where companies make a lots of money not knowing that it’s causing their consumer to suffer, according to Cancer Research UK, and some children and teenagers in the UK start to smoke just because everyone is doing it or because it is like fashion to them.
Where the company advertising tobacco, they are doing it to encourage children to smoke and now in the UK the government has encourage the company should do whatever its takes the consumer to stop. For example like every packets of cigarettes were written as ‘ Smoking is dangerous’, this show that the government is actually trying to stop the consumer smoking because they see it as unethical issues or behaviours of the firm to sells tobacco.
I will now list one unethical behaviour of the company to consumers which is;
Selling tobacco to the consumers
The products that British American Tobacco plc sells to its consumer can have a good side and bad side effects. This company sells cigarettes, which are made of tobacco.
The company aim to help women to slim down or to calm them down, for those who are stressed or in a really bad mood. Whereby there are lots of ethical consequences which are as following:
- Consumers may think that smoking make women to slim, but as a human being we all know that we have small cancers in our body, and if women continues to smoke, depend on how many times, and it goes straight to their immune system, and smoking can developed huge cancer which can lead to death.
- Every packets that were written as ‘smoking is dangerous’, consumer don’t actually see it as a serious matter, and they are continuing to smoke. The company is not to be blamed, but the consumer’s.
- Last year, people were allowed to smoke in the premises such as restaurant, bar, offices and so on. The government did a lot to encourage people to stop smoking by banning them from smoking in any premises and people are still finding another way to start smoking.
- According to the company’s annual reports, a part that said ‘ Harm reduction’. It said that ‘the company’s regulation broadly focuses on three areas: preventing people from starting to smoke, encouraging quitting and protecting people around smokers’. I believe that the company know that what they are actually offering to their consumer is not good for them and beside they are encouraging people to stop smoking and the consumer are still doing it without even thinking twice, and this make the company to gain more profits whereby the consumer is risking their health.
- According to the annual reports is also said ‘smoking poses real and serious health risks, but nicotine, at the levels smokers take does not’ so what they are trying to say here is that they know that smoking is really bad, but for those who are trying to quit smoking by using nicotine does not risk anything to harm the human body. The company are actually try to encouraging people who smoke to use nicotine and that will actually benefits the consumer
- Another ethical consequence may be that women, who are pregnant, are not suppose to be smoking and else there are some women who are smoking while they are pregnant. This causes the baby to die or even as a disabled baby for example some doctors said that smoking while a women is pregnant causing most of the baby to have a down syndromes.
a) Identify and describe the ethical consequences of your selected organisation’s business activity for other stakeholders concerned. (e.g. community, governments, pressure groups, shareholders, suppliers)
Stakeholders are the Individuals or groups who have some form of interest in the organisation and some power to influence, to a greater or lesser extent, the organisation’s decision making. These groups can be part of the organisation, and yet they are also part of the environment in which the organisation operates. Stakeholders are likely to influences in the way the organisation responds to the opportunities and threats in the environment. If the organisation does not respond in the ways required by powerful stakeholders, then these stakeholders may exert their power in ways that may threaten the organisation.
The ethical consequences of British American Tobacco plc business activity for other stakeholder concerned are as following:
- Air pollution
- The use of natural resources
- The use of child labour
- Payment of decent price for raw materials from supplier
British American tobacco is to be blamed for the air pollution, which causes the huge threat of the public’s health. They caused it by advertising to their consumer, persuading them to buy their product, in which they know that its can cause problem to the public, however many people nowadays are smoking and the more they smoke, the more they cause the air pollution to the environment which may in fact causes according to the guardian.co.uk, saying that air pollution caused an estimated of 120,000 people to die in 30years and its also caused the non-smoker to get a lung cancer. Air pollution should be deal with as they caused many to die.
The use of natural resources:
British American Tobacco make use of natural resources which may caused a huge threat to the environment such as oil, meanwhile businesses who use natural resources and transforming them, their capital stocks are build up which add to the wealth of present and future generation, but should consider using their profit to save the environment. The consequences of their resource use in terms of impacts on the environment may induce serious damages that go beyond the carrying capacity of the environment. These effects risk being aggravated once the developing world has taken up growth and resource use similar to the industrialised countries
British American Tobacco causing the nuisance in terms of noisy and smelly from the manufacturing process, in which they produce cigarettes and tobaccos, that may have affect on the environment and also especially the health of the people who lives in the local community. However it is really important for the stakeholder who have an interest of businesses like British American Tobacco to minimise the amount of nuisance caused by the company and should solved the problems causing by nuisance.
The use of child labour
The use of child labour by any businesses is a way of reducing cost of production. In British American Tobacco,There has been child labour in Mexican tobacco growing for centuries. Traditionally, farmers in Nayarit, the tobacco growing region, have employed indigenous highland people to harvest the leaf. Families migrate to the area for four months to work on the harvest, with adults and children, some as young as five years old, working and living in the tobacco fields. They suffer interrupted schooling and potential exposure to health and safety risks. (British American Tobacco- Tackling child labour in Mexico)
Tobacco farming, particularly in developing countries, is one of the sectors with a child labour problem. As the only international tobacco group with a significant interest in tobacco leaf growing, we are committed to working with other key stakeholders, including tobacco farmers, to address the problem in our supply chain.
Child labour should be deals as it is unethical to some company for example next plc refused to use certain suppliers from China because of allegation of forced and child labour being used.
Payment of decent price for raw materials from supplier
Payment of decent price for raw material from supplier is what the stakeholder of BAT are interested in, as they make sure that the company is actually paying the right amount for the raw materials that they supply. The business must pay their supplier in order for them to get discount for a large order which will enable them to supply the best raw materials and also in order for them to maintain a good working condition.
b) Using examples, analyse ways in which relevant stakeholders may influence business behaviour
Definition of Stakeholder
Individuals or groups who have some form of interest in the organisation and some power to influence, to a greater or lesser extent, the organisation’s decision making. These groups can be part of the organisation, and yet they are also part of the environment in which the organisation operates. Stakeholders are likely to influences in the way the organisation responds to the opportunities and threats in the environment. If the organisation does not respond in the ways required by powerful stakeholders, then these stakeholders may exert their power in ways that may threaten the organisation.
There are two different types of stakeholder, these are:
- External stakeholder such as bankers, customers, suppliers, shareholders, governments, community etc
- Internal stakeholder such as owners, employees, salaried managers
The stakeholders of British American Tobacco plc are:
The interests of the stakeholders are as following:
Customers is one of the stakeholder in the business, the customer are only interested in the value of their money because the customer need to make sure that they get something value of their money for example higher quality of products or service. They are interested in the location of the business so that it is flexible for the customer to travel to the store. If the business is not located nears to their customer, this will make the customer fed up of travelling to the store and will rather shop in a store that is close to them.
They are also interested in a prices of a products and services, because if the company charged higher price of a particular products or services, this will make the customer want to shop elsewhere like Tesco, Wilkinson, or Morrison for a cheaper tobacco , because these businesses sells good quality of products at the lower prices. The company will need to make sure that their products should be of a good quality and charged reasonable prices so that the customer will wants to buy it not because of the prices, but because of the higher quality of products or services that the company offering.
Employees are interested in having a well-paid job and secure place of work. The employees would like to see extra holidays and generous fringe benefits such as a Christmas bonus, birthday bonus, etc.
The only way they would change their expectations would be if there was either poor management in which they would complain to someone as high up the chain of command as they can, also if there was quiet an aggressive area and the customers were to start getting violent, the employee should expect some protection, e.g. security guard.
The employee do have conflicting views with other stakeholders but normally just the management or shareholders, they can sometimes disagree with the managers because the business may be generating much profit and they don’t receive anything extra but most of the time they will be kept happy as the management can rarely afford any strikes, revolts, etc.
Government is always interested in business because of the employment, they will also want full taxation and they want the company to meet the legislative requirements. The government also creates laws to stop the company for being unlawful in its competitiveness. The government cannot change its expectations of the company. The government may have to come to expect more taxes off the company due to the expansion.
Shareholder is interested in good return on investments, because they invest money into the business; they are also interested in maximum short-term profit and valuable long-term growth.
The shareholders expectations first off will be that the business does not lose their investment, if the business makes profit, they will expect good returns on their shares and they would most probably like to keep them and speed up the businesses growth so they could receive even larger returns or their investments.
The shareholders can only disagree with internal stakeholders usually managers or directors when they are not generating enough profit in which they could pull their investment out before it is worthless
Suppliers are very interested in the business because if the business grows, the supplier will have more units to supply, and if the business gets more customers, then the supplier will be complying larger orders so for as long as the business grows, the supplier will have a suitable demand. The company will be prompt payers because the business is successful. The supplier affects the company in a way that they deliver their tobacco so the company is heavily relies on them to be prompt and on time, if they are not, this could cause disruption
Managers are interested mainly the pay, perks, power, prospects and good corporate image which suit the business. The managers could expect good fringe benefits and holidays. They may also expect a chance to invest into the business so they could receive good returns on the shares. If the managers were to ever change their expectations, this could alter the business quiet severely, e.g. if they were to become less strict on staff, they may start slacking and the business could go downhill.
The managers often conflict with other stakeholders fairly often, there is a reason to conflict with most other stakeholders normally, it could be any reason, such as: staff not working to full standard, owners/shareholders trying to draw out too much profit, suppliers charging too much for goods and even customers complaining about poor service and organisation.
The directors would be interested for the business just to survive so they can be sure that they don’t lose their investments. Now the business is running properly, they want to have good returns on their investments by decreasing costs and maximising profits.
The directors would like to see the business to expand and use their good investments to do so, with this backing, the business will be able to rely on the directors as a first option for a loan, etc. as they will receive good dividends if the business is successful.
The Directors expectations will be the business succeeding and giving good returns on their investments, but if the business ever starts to decline or lose sales, the Directors will lose interest and be less willing to invest more.
The directors rarely conflict with other stakeholders; this is because they normally are the business and so and internal stakeholders can’t really disagree, the shareholders are the only ones that could ever disagree but as in Sainsbury’s, the shareholders are the directors
The influences of the stakeholder’s of British American are as following:
- Local community
Customers- customers may be concerned for many reasons may be it is about the lack of services that the business offer or may be because the products in which the business sells are dangerous.
Customers play an important part in the BAT, as they are BAT main concerns. It also shows that they are willingly fulfilling customers’ need and expectations. These include: -
Good-quality products delivered on time
For high technology after-sales service is vital
Employees are essential to BAT because without the employees they would have no business to run. Part-time or full-time employees are important stakeholders for BAT Plc. Because they are involved with BAT Plc very closely, there are likely to have strong influence on how to run the business. Expectations of employees are likely to include the following: -
- Clean and safe working environment
- Job security
- Rewarding the quality of their work
- Opportunities for promotion and a career structure
- Competitive pay rates and discounts on company products
Government plays a very big part in BAT for instance if BAT wants some information regarding their business they have to respond to the government and also BAT are legally obliged to pay taxes to the inland revenue which is done through the government. The government have a variety of reasons to be interested in BAT and some of them are: -
- Inland Revenue collects income tax from Boots Plc. This government agency are particularly interested in the financial affairs of Boots Plc
- Another government agency, which has a duty to collect taxes, is Customs and Excise. It collects added tax (VAT) and also keeps an eye on the financial affairs of Boots Plc
- Regional offices collect a wide range of information on business on behalf of the government and is also run by the government
BAT is expected by the government to provide the goods and services that the economy needs and also to provide employment. Government expect from BAT’s goods to and services to be sufficient and of sufficient quality, to allow the country to trade with the rest of the world and the economy to grow. Government also expect from BAT to provide employment, which is fair, safe and fairly paid. Employees provide the government with income through taxation.
Supplier BAT must have good relation with their suppliers for preventing conflicts between them. BAT suppliers want regulars orders from them as this helps them to be successful and increase their profit and also they want to make their financial position healthy and don’t want to be in debt. They want to supply a business which are reliable and which have a stable income in the business so that they can assure that they will be paid on time.
Local Community is important parts of society as well to BAT. Local Community depend on Boots Plc to provide Employment around their society. Local community expects the following things from BAT are: -
They want BAT to provide employment for people living around their local area
People living in the local area where BAT is located wants them to prevent environmental pollution, noise or any other problems that might affect the local community
Large business like BAT needs to operate within the community in the local area. BAT being a large business will provide employment; minority of the money earned will be spent locally. BAT attracts other business - e.g. suppliers and this will create more jobs. Some businesses are asked to regulates its own activities like car parks etc, but BAT have never been asked to do this as their car parks comes in the local community’s town car park. Other major businesses contribute directly to the local community’s by sponsoring or other activities, however BAT don’t do this. The local community welcome BAT because they bring benefits by providing employment.
Creditors (Banks/Creditors) Financial position of BAT is very healthy so they don’t rely on banks for their debts or rely on them for giving them loans. The bank therefore will not need any information on the business and their financial position and how much profit they have earned or much profit they have lost.
c) Using examples make supported recommendations for ways in which the ethical behaviour of business organisations may be influenced.
I think British American Tobacco has both sides of ethics, first the company is ethical, but in many section are unfair and unethical for example the company sells unsafe or beneficial products in order to achieved one of the aims which is to make profit.
Although many countries including the UK are banning tobacco advertisements for example In the UK, the government are try to encourage people to stop smoking by making heavy regulations on tobacco advertising . Tobacco company are not allowed to make their advertising that will directly encourage them to smoke, and if they do they are breaking the government’s law and that makes the company unethical.
Meanwhile another examples of the business’s behaviour is that Government believes that banning tobacco would help cut the number of people taking up smoking, but the company disagree with the idea claming advertising is the only way that would encourage existing smokers to swap brands and that would be the end of it, but yet many people are still buying from (BBC 1999) and that is another example of the company being unethical.
Another example is that many Tobacco companies have spend over millions to advertising their products per year and their promotions continue to increase the following years because these companies found another way to advertise their product whereby they know that they are breaking the government’s law.
Now I am going say how these stakeholders including Governments, pressure groups, trade unions, etc would pressure the Tobacco to change their unethical behaviours
I believe that the government is trying as much as they can to stop people form smoking and yet people are not taking it serious as they found another way to start smoking. I also believe that the Governments would pressure the company to change their unethical behaviors by sending out laws and regulations and if the company breaks the law, the government would have no choice but to close down the business. On the other hands, the government cannot ban the tobacco completely, but it is possible that they can minimize the production of the products; the reason is that these products are more or less addicted, many people got addicted to it for some reasons so by the government minimizing it, can help determines how much tobacco is consumed by smokers.
The government can find another way to stop the unethical behaviors, by increasing the prices of the products and they can also reduce the consumption of tobacco and raising the tax rate of tobacco above the inflation rate from 1993 to now, this was implemented to help reduce consumption further. its may look like the governments is just doing it to please themselves because of a large amount of public money comes directly from the tax that they charged for those who buys cigarette.
But at the same time the government is trying to stop people from smoking by banning people from smoking in the public places such as restaurants, pubs, shopping malls etc and also sending out laws and regulation telling all the tobacco companies to advertising with a warning saying that ‘smoking caused death’ for example, the image below as you can see:
The trade unions may or may not have pressure the company to change their ethical behaviors according to Financial Daily (Tuesday August 07, 2001) that Trade unions have decided to protest against the government’s proposal to pass a legislation banning smoking in public places, so I believe if the trade unions support the government’s legislation, it may pressure the company to change their unethical behaviors as they will feel bad and they will want to stop selling tobacco to their consumers. Trade unions may pressure the company to change their unethical way in a favour of the employees in terms of salaries and good working conditions and if the company don’t provide it, its could leas them to protest and the company will be seen as a bad reputation.
Consumers and suppliers associations
I believe that they could pressure the company to change their unethical behaviors for example if they support the new legislation of the government banning smoking in public places they would have stop supplying cigarette or materials to make cigarette to the company and the company will not have any choices but to close down or change the way they produce the cigarette.
I think the company would have try as much as they can to encourage people to stop smoking by promoting their products with warning, but the company aims is to make profit and yet they are causing a huge health risk. The company can improve to become ethical by producing their products illegal or the use of tobacco should be reducing so that the government will not be collecting more money from them in terms of taxes.
But the fact that the government cannot ban tobacco; they can possibly minimize the products because they are more or less easier to be addicted to it. This can helps the government to determine how much tobacco is consumed by a smoker, and this can then have a reason for the government to increase the price of the product and also reduce the consumption of tobacco. This could improve the ethical of the company by making sure that they are saving their profit rather than spending it o taxes for the government to be able to get enough money to treat the cancer patients.
This student written piece of work is one of many that can be found in our AS and A Level Structures, Objectives & External Influences section.
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