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Business Ethics

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LONDON SCHOOL OF COMMERCE UNIVERSITY OF WALES INSTITUTE CARDIFF MASTER FOUNDATION PROGRAM FEB 2006 ASSIGNMENT IN BUSINESS ETHICS ALI OZAN PEKINER 174JCJCWCF06 TABLE OF CONTENTS Introduction 1) Business Ethics a) Motives of Business Ethics b) Business Ethics Criteria c) Approaches for Implementing Business Ethics 2) Whistle Blowing a) Methods of Whistle Blowing b) Case Studies Conclusion References Bibliography 1 2 3 3 4 5 5 6 8 9 10 Introduction 30 years ago, Milton Friedman, Nobel price winner for economics, argued that "there is only one social responsibility of business, which is to use its resources and engage in activities designed to increase its profits"1. Last 20 years have been marked by the increased globalisation of markets, and intensification of competition2. The collapse of the communism and the rise of pacific economies have enlarged the international trade. The development of new information and communication technologies has resulted not only in an international relocation of the production, but also changed supply chains for products and services. The consumers all around the world became more sensitive and aware of different products. These changes have forced companies to increase their effectiveness, by maximising the quality of their products. On the other hand, on local, regional, or global levels, different unions and organisations have become more influent in order to facilitate and regulate the international trade. Some of these organisations are European Union, Nafta, Oecd, Wto, etc. These changes have driven today's business to become more open and accountable. This situation requires re-examination of business attitudes and approaches, not just financial, but also in social and environmental issues. Companies now are not only improving their poor practices, also they are implementing a global ethical thinking. This assignment is going to discuss ethics in business. By giving definitions and different approaches of business ethics, we will try to understand, in the first part of this study, why companies tend to act more ethical these days. ...read more.


On the other hand, value-led programmes have their foundations in the individual's right to ethical autonomy. They focus on the company's values and principles and how they apply to situations where no rules apply. Employees are encouraged to act ethical, but not by the fear of punishment, to ask questions or to raise personal concerns. Team working, consensual decision making, whistle blowing, leadership are examples of value-led techniques. These approaches are not alternatives, they both are essential to encourage ethical behaviour in an organisation. It is also important to take actions in addition to the creation of such ethics systems in the company. To do this successfully, business must have a vision, which is shared by everyone in the company9. Training of the employees and establishment of right communication channels for feedback are important factors of encouraging ethical thinking. Also rewarding systems are more efficient than punishment on the motivation of people. 2) Whistle Blowing Whistle blowing is a disclosure by an employee or professional of confidential information which relates to some danger, fraud or other illegal or unethical conduct connected with the work place, be it of the employer or his fellow employees10. Organisations tend to introduce whistle blowing policies for three reasons11. First of all, they want to comply with the law. There are different legislations on national, regional or global levels. In the United Kingdom, the public interest disclosure act, which came into force in 1999, says "for so skilfully achieving the essential but delicate balance between the public interest and the interest of employees"12. It extends far beyond employment rights protection and provides almost every individual in the work place with full protection from victimisation. Another reason is to become an accountable management. By doing so, the company wants to improve the motivation and performance of its employees. This will also create an ethical corporate culture, where everyone shares the same values. ...read more.


She is receiving loyalties from this book, in return of that ethical action she has taken. As we described in previous sections, awarding is more effective than punishment in the motivation of people, especially when it is related to morality and ethics. On the other hand, Chairman Kenneth Lay and Chief Executive Officer Jeffrey Skilling are accused of conspiracy and fraud, facing 28 years for Skilling and 6 years for Lay. The trial of white collar crime is still running. Conclusion We see in these two cases that ethical behaviour is directly related to a company's performance. In the first one, Nordstrom employees used whistle blowing in order to protect their level of customer satisfaction and the company's effectiveness. In the second case, we see Watkins blowing the whistle for protecting the company from bigger troubles, even if Enron doesn't exist anymore. This demonstrates that ethical acting is morally acceptable, because first of all, it is related to personal and professional ethical satisfaction, then it contributes to improve social dysfunctions and malpractices. Ethical behaviour has become a major factor of business competition. Companies are learning to collaborate on labour and environmental standards, hoping to minimise the risk to their reputations outside and to increase their performance inside. But to do so, they have to create a suitable culture where everyone learns to act ethically rather than creating policies which are required by national/international laws. The morality and ethical behaviour are the characteristics that all the companies and their managers must have prior to the employees of these companies. Whistle blowing is a good opportunity for businesses to manage the risk and the crisis. Big companies are paying consultants lots of money in order to find the malfunctions in their organisations. Whistle blowing is a free of charge control system that alerts the top management when there is a problem. When companies believe in effectiveness of whistle blowing, moral questions about the whistle blower will disappear. They will no longer be treated as disloyal, complainant and harmful, threatened to lose their job or to be socially excluded. ...read more.

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