Ethical Dilemmas

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Ethical Dilemma in Today's Business Global interdependence is a compelling dimension of the global business environment, creating demands on international managers to take a positive stance on issues of ethical behavior, social responsibility, economic development in host countries, and environmental protection around the world. However, there were still several large multinational companies indulging in ethically questionable practices. If MNCs behave unethically, it soon comes to the notice of the public and the companys image is tainted. Multinationals are often worse off for having behaved unethically in the interest of short term gains, as the bad publicity generated by unethical practices leads to far greater losses in the long run. In the challenge of modern society, manager or worker often encounters a situation than challenges ones ethical beliefs and standards. Managing across border increasingly includes difficult ethical dilemmas. It is less clear where to draw the line between ethical behavior and the corporations other concerns, or between the conflicting expectations of ethical behavior among different countries. The paper aims to (1) discuss current ethical dilemmas in global environmental ethics, (2) examine how multinational would address conflicting norms and expectations by illustrating one case study of ethical dilemma and its resolution.

Nestls Corporate Crimes1.0 Nestls ethical dilemmas 1.1. Unethical marketing practices

Infant formula In 1977, Nestle got embroiled in a controversy, when it was criticized for using unethical marketing practices endangering consumer health to promote its infant formula in developing nation. A number of aid agencies called for the boycott of Nestle products and this protest continued right into the 1980s, when Nestle agreed to adopt the infant formula marketing code laid down by the World Health Organization and UNICEF. Although Nestle had a charter on infant formula, the company is usually violated the principles laid down in it (Refer to reference3). Genetically Modified Foods Nestle was criticized for using genetically modified (GM)[1] ingredients in its food products, and was accused of dumping products rejected in Europe in developing Asian countries where the laws on GM products were either absent or less stringent. For Kant, the companys decision makers would have to be willing to advocate marketing the product

even if they were themselves in the position of uniformed consumers. Therefore, providing unsafe products standard and ill-informed consumers by Nestle is absolutely wrong. 1.2. Overcharged prices

Nestle launched bottled water, called Pure Life in some Asian countries like Pakistan and India (in 1998 and 2001 respectively). Nestle introduced bottled water, which provided safe clean water but priced it so high that it was unaffordable for the lower income groups. It turned water into a luxury by pricing it around $ 0.4 (in Pakistan) for a one liter bottle. According to utilitarianism, ethical action is evaluated by looking at its consequences, weighing the good effects against the bad effects on all the people affect by it (Shaw & Barry, 2004). Most developing countries laced basic drinking water facilities. A very high water price was charged by Nestle limiting a number of people to buy it. Nestls action produces the worse for the greatest number of South Asian because people could not afford for water which is basic human needs and is sporadic and contaminated in south Asia countries. 1.3. Unfair labor practices

Nestle was one of the biggest purchasers of cocoa from Ivory Coast, a country in West Africa. UNICEF studies and International Labor Organization (2002) revealed that the workers on these plantation lived and worked in poor conditions. They were paid minimal wages and exploited by the land-owners. Most of the workers had been trafficked by bought and sold, making them practically slave labor. Nestle purchased cocoa from these farms despite its awareness of the conditions of the laborers, thus making it a party to their exploitation. Child labor was also employed on the plantation. UNICEF and The International Institute of Tropical Agriculture (IITA) studies (2002) revealed that over 200,000 children were shipped to Ivory Coast and other cocoa producing countries in Western Africa from neighboring countries like Mali and Burkina Faso, to work on the plantations, especially during the harvesting of cocoa or coffee beans. Another unfair labor practice was occurred in Thailand. When a group of 13 workers, wording in a sub-contracting facility of Nestle in Thailand, organized themselves to form a union, Nestle immediately cut the number of orders to that company and asked the company to put the unionized workers on indefinite leave with half pay. The workers were force to quit because of their lowered pay (Manager 2001). In doing so, Nestle had clearly denied these workers their right to organize themselves to better their interests.

1.2. Applying De Georges principles International business ethics refers to the conduct of MNCs in their relationships to all individuals and entities with whom they come into contact (Daft, 2002). Ethical behavior is judged and based largely on the cultural value system and the generally accepted ways of doing business in each country or society. MNC Manager must decide whether to base their ethical standards on those of the host country or those of the home country and whether these different standards can be reconciled (Donalson, 1996). 1.2.1. Do no harm

Thompson & Stickerland, (2003, p. 65) asserts that a company has ethical duties to owners, employees, customers, suppliers, the communities where it operates, and the public at large. The norm of doing no harm requires Nestls management to look beyond its own interests (i.e., cheap cocoa, and high market-share). Unethical marketing of infant formula and GM foods in developing countries are example of doing harm knowingly and willingly and of benefiting from the lack of legal restraints to the detriment of the eventual consumers. If business follow Kants rule, it will provide a quality and safe product to its entire market. Nestle decide to sell unsafe (GM) foods even it knows that the product is unsafe. In addition, Nestls marketing strategy in developing countries was to distribute free samples to nursing mothers, thus getting the baby used to the formula very early in order to get a hold on its captive market. Unethically, Nestl promoted the use of infant milk formula as a substitute for mothers milk. This unethical manner causes widespread infant malnutrition and susceptibility to infection, which could even lead to infant death. Following this norm, Nestle should preserve the safety and health of consumers by disclosure of appropriate information, proper labeling and accurate advertising. Workers on cocoa production from Ivory cost were paid below minimal wages and were practiced as slave labor. Despite its awareness of the conditions of the labors, Nestle continued purchased of cocoa from these suppliers. The company must pressurize its suppliers to change because it is in a position of major buyer. Regarding to Nestls in Thailand, the company should respect the right of employees to organize for the purpose of collective bargaining. Nestle had better prohibit retaliation to their employees, though disciplinary action, or an anti-harassment policy. In addition to Anti- harassment, companies need to develop policies and procedures to prevent retaliation against individual who file complaints of harassment or discrimination or who participate in their investigation (Zimmerman, 2002).


Do more good

In Ivory Coast, Children worked in hazardous conditions using machetes and spraying pesticides and insecticides without the necessary protective equipments. Such exploitation involves in significant Nestls profit since the labors received only a very small proportion of the price paid for the Nestle product by the final consumer. According to the norm of doing more good than harm to host country, Nestle must stop buying cocoa from South Africa, which is under apartheid and uses child labor in hazardous working condition. For a utilitarian, however, these are considerations that can be balanced against other considerations, such as the benefit to others. On the other side of the balance are factors like corporate reputation (Orts, 1995). These factors can make corporate altruism worthwhile in the long run, even at the short-run expense of the stockholders. Nestle should demonstrate its ethical commitment through philanthropic contribution and use of its expertise and resources on numerous social problem in host countries. Importantly, Nestle should integrate social and ethical issue in strategic process (see figure4). Along with an investment appraisal, such planning should include an environmental impact assessment. According to Whetton & Cameron (2005) leadership is the key success for organizational change as well as the key to aligning organizational systems and follower behaviors around a new organizational vision. Ethical leadership practices are necessary prerequisite for organizational effectiveness (Ausguien, 2001). Therefore, Nestle top management must train to be ethical leadership (see Recommendation action in appendix3). Figure4: Integrating social and ethical issues in the strategic management process Social & Ethical IssuesEnvironmental Analysis Establishing Organizational Direction Strategic Implementation Strategic Formulation Strategic Control Source: Adapted from Thompson & Stickerland (2003, p.7)

To upgrade companys ethics, Nestle must impose codes of conduct that treating other person with respect and should provide leaderships ethical training as leaderships are key person to make a strategic-decision. Examples of codes of conduct include do not use child or forced labor, provide a safe working environment, and respect worker rights to unionize (Refer to figure2). Corporate moral excellence can be alternative to develop Nestls ethical culture. For a corporate to be morally excellent, it must develop and act out of a moral corporate culture (Hoffman, 1994). In a situation with intolerance arise, manager should be guided by precise statements that spell out the behavior and

operating practices that Nestls demand. Nestle must be careful when placing a foreign manager in a country whose values are incongruent with his own because this could lead to conflict with local managers, governmental bodies, customers and suppliers. 1.2.3. Respect the human rights of their employees

Doing good business and being a good employer is pivotal and important guidelines in doing todays multinationals. In fact, ethical business must respect for human dignity, and protect the fundamental rights of people. According to Aristotelian, equal should be treated equally and unequal unequally (Hirschman, 2001). This infers that individuals should be treated the same, unless they differ in ways that are relevant to the situation in which they are involved. If labors work the same jobs, they should be paid the same wage. If Nestle pays its labors less than other companies, then Nestle has an injustice in remuneration system. Violating human rights is immoral practices due to Kants principle. This indicates that Nestle exploited and treated others as means rather than as ends, as thing rather than as person. Not only does Nestle (exploiter) fail to do its duty to others, but also fails to do this duty to itself; Nestle make itself into an object. 1.2.4. Respect local regulations

MNCs are subject to the laws, regulations, and jurisdiction of the countries in which they operate (OECD, 2004). Nestle must not resist against law that protect the countrys workers or consumers, even if such laws make operating in these countries less profitable. It is evidence that Nestle did not respect for domestic rules and regulation. Nestle broke Thai law bys paying workers less than minimum wage and cut them off. For consumer safety, Nestle did not respect the laws and regulations of the countries in which they operate with regard to consumer protection. In China, there is a regulation of GM food, which required that all products which were contained GM ingredients, be labeled explicitly. Despite consist of GM ingredients, Nestle products were not labeled. Indeed, it could not unilaterally continue with its double standard practice and ignore the concerns and demands of the general public in Asia.

[1] Genetically modified foods are lab-crated grains, vegetables, fruits and other primary foods. Their use has been somewhat controversial. Some people are concerned about the consequences to their health of the use of these products. European countries require all GM foods to be clearly labeled as such; however, in countries Canada and the US, labeling is optional.

Ethical Dilemmas in Business

There are many areas where ethical dilemmas arise. Here are five categories of common ethical dilemmas in business: 1. Human resource issues 2. Employee safety issues 3. Conflicts of interest 4. Customer confidence 5. Use of corporate resources We shall discuss ethical dilemmas related to customer confidence here. Customer confidence It is the ethical responsibility of every employee to ensure that customers are treated fairly and that no harm comes to customers as a result of using the companys products or services. There are three types of issues associated with customer confidence: Confidentiality has many aspects. It includes not divulging information about the particular products or services that a particular customer purchases. It can include medical information revealed by a patient or discovered by a physician in connection with the treatment of a patient. In general, it can also include protecting information on mergers or downsizing plans, or even the fact that an organization or individual is a customer. What is the purpose of a physician's ethical duty to maintain patient confidentiality? It is to allow the patient to feel free to tell his doctors fully and honestly knowing that the doctor will not disclose it to others. Full disclosure by patient enables the doctor to diagnose conditions properly and to treat the patient appropriately. In return for the patient's honesty, the physician generally should not reveal confidential communications or information without the patient's express consent unless required to disclose the information by law. Under certain conditions, example when a patient threatens bodily harm to himself or herself or to another person, the doctor may have to inform the relevant authorities. From time to time, the officers in the company will have inside information that may not be known to the general public. This may be information about new products, plans or processes, mergers, acquisitions, negotiations relevant to significant business deals, contracts, sales, lawsuits, or special relationships with others. You cannot use undisclosed material information (including material facts and material changes) concerning the company, its shareholders or partners to your personal advantage, or the corresponding disadvantage of others in the securities market. It is also prohibited for a person with such information to give it to others, or "tipping", so that the other person may improperly make use of the information. The issue of confidentially is not very often straight forward. For example, many businesses do have to situations that may be awkward because of the need for confidentiality, and yet be transparent. These awkward decisions may arise because commercial confidentiality requires that the corporation conceals or otherwise deflects attention away from certain commercially sensitive information. It is not always easy to draw the line between confidentiality and transparency. Product safety means ensuring that the products entering the market are not harmful, and is the ethical responsibility of every employee. No product is completely safe, but it is the organizations responsibility to disclose all known effects of the product. The recently announced recalls on Aug 14, 2007 by Mattel for 9 million more Chinese-made toys, including popular Barbie, Polly Pocket and Cars movie items, and warned that more could be ordered off store shelves because of lead paint and tiny magnets that could be swallowed.

The recalls came nearly two weeks after Mattel Inc., the nations largest toy-maker, recalled 1.5 million Fisher-Price infant toys worldwide, which were also made in China, because of possible lead-paint hazards for children. The recent recalls by millions of toys made in China because of safety issues has done tremendous damage to China as a whole. The boss of one of the China toys maker committed suicide as a result. Truthful advertising encompasses two primary types of ethical issues: exaggerating product features and falsifying product information. Deceptive advertising is unethical and it is the responsibility of the employee as well as the organization to see that false advertising does not occur. The episode of discovery by two students Anna Devathasan and Jenny Suo in New Zealand that Ribena contains almost no Vitamin C at all had done tremendous damage to the reputation of GlaxoSmithKline, a global drug giant. Still stated in the company's web site is the following statement about Ribena: "First made using blackcurrants in the 1930s, Ribena is a fruit drink available in a number of different flavours. The best-selling variety is still made from fresh blackcurrants. "Ribena Really Light" is the low-calorie, "friendly to teeth" version of Ribena with no added sugar." The above statement stated that Ribena was first made using blackcurrants - it is a statement of fact. However, it does not state that it is no more made using blackcurrants. GlaxoSmithKline had always associate Ribena with blackcurrant in the past (with the claim "contained four times the vitamin C of oranges") until the episode and most of us were made to believe that Ribena was made from blackcurrants. GlaxoSmithKline pleaded guilty and admitted it may have misled consumers in adverts that said blackcurrants in Ribena syrup had four times the vitamin C of oranges.

We shall discuss ethical dilemmas related to human resource issues here. Human resource issues Human is the most important resource to an organization. Issues associated with human resources occur as a result of employees working together. These issues are by far the largest category of ethical dilemmas in business. The four main types of human resource issues are as follows: Hiring and Termination Issues Recruitment or hiring process is the first step in selecting human resource into an organization, and will significantly influence the successful performance of the organization. Ethics plays a very important role during the recruitment of new employees. Law and regulations dictate that we have to be ethical in hiring. However, ethical hiring practice goes beyond them as well. It has been widely reported by many researchers that ethical hiring practices actually result in better employees being recruited. It is therefore important that sound ethical rules are followed when hiring a new employee. It is of vital importance that candidates are to be selected based on merits. Applicants are to be hired based purely on merits such as knowledge, skills, and ability in accordance to the needs of the organization.

If a company provides any special considerations, for example affirmative action, where certain groups are given special considerations, these considerations should be well stated in the company's policy statement. In any case, any preferential treatment should be one that is legally allowed. While preferential treatments to certain specific group may be allowed, there should be no discrimination to people from any other group due to race, religion, gender, marital or even pregnancy status. Consistency and objectivity during the recruitment process are very important. Criteria, including any changes in the criteria, used for evaluating candidates should be stated and explained to order to avoid unnecessary claim of biasness in the recruitment process. Objective evaluation results in the best employees being recruited while consistency ensures high morale among employees. When we recruit new employees, we should tell the applicants about the true state of the organization. We should not mislead the applicants. In particular, the applicants should be told all pertinent information, including those information that are not publicly known but that will materially affect the new employee's future employment prospect with the organization. We can learn from the case involving Phil McConkey. Phil McConkey was recruited but he was not aware that the company was in the process of being taken over by another entity. One year after joining the company he lost his job with he new company. He sued the company for with-holding important information from me during the recruitment process. He won the case and was awarded $10 million. We should never place misleading job advertisement in order to get applications if we are offering a job contract different from what we advertised for. For instance, if we want to engage independent contractors instead of normal salaried employment. The reason why we choose to engage independent contractors is that we do not have to be burdened with high salary cost for employees that are not competent, but we are willing to compensate employees according to performance. We should always state clearly our terms of employment. In any case, we do not want to be accused of any job scam. We have to be extra careful when we are recruiting employees from organizations that have material dealing with us include our suppliers, customers and competitors. If we are not careful ethical issues very damaging to us can arise. When we employ somebody from our suppliers, the suppliers may feel that we have unethically poached their good employee. After all, it is through the working relationship we have with the suppliers that we can to know the quality of this employee. When we employ somebody from our customers we can be accused of returning favor to that person. This rule applies especially when employing a former senior government employee that has an influence on the awards of contracts to an organization like yours. The case of Ms. Darleen Druyun at the Department of Defense and Mr. Michael Sears at Boeing is a good illustration of the importance of such a rule. In this case, employment favor was apparently granted by Boeing in exchange for favorable consideration for the awards of contracts by Department of Defense. Also, be careful not to employ former government employees for the purpose of lobbying for contracts from their previous government departments. At least, do not do so within the first two years of the employee leaving the government service. It is also not very wise to employ somebody from our competitors because we can be accused of stealing trade secrets from our competitors. If that employee can pass on his previous employer's secrets unethically, what is there to sop him from passing your trade secrets to others? Even though it may not be considered as unethical by some employers, as a matter of courtesy and good public relationship to inform an unsuccessful applicant.

When an employee is asked to leave, it is also of vital importance that it is handled with fairness and care. If it is a case of poor performance or disciplines, the employee has to be given prior warning (unless it is violation of a well stated policy or is of a very serious nature) and fair hearing. In any case, do not hurt the dignity of the employee and offer to provide the necessary assistance where appropriate. Before an employee leave for any reason, provide him/her with an opportunity to provide feedback on the overall state of the organization by conducting exit interviews. Discrimination is the unfair or preferential treatment of a person on the basis of one or more uncontrollable characteristics, including race, gender, age, color, religion, or national origin, as well as handicapped or pregnancy status. Discrimination against others in the workplace can impair your ability to perform your job according to company expectations. In most countries, there are laws that protect potential and current employees from discrimination based on age, race, color, national origin, religion, and gender, as well as pregnancy or handicapped status. Performance Appraisals are conducted to evaluate an employees performance over a set period of time. When evaluating subordinates, one has to remain consistent and objective. Consistency is even more important when evaluating an existing employee than a prospective employee. Consistency requires that you treat every employee's misbehaviour the same way. For example, it would be wrong to punish one employee's tardiness while leaving another employee's tardiness unchecked. In order to maintain objectivity, the companys standardized evaluation forms should be used. In this way, uniform criteria can be used for the appraisal of all employees under you. Also, all employees in the company are evaluated based on the same criteria. Constant feedback and communication between you and your subordinates is necessary to facilitate a positive and productive working relationship. Dont wait until periodic performance evaluations to express your observations and suggestions. In fact, it is unethical to base salary adjustments upon performance problems that have not been brought to the employee s attention. For employees being evaluated, honesty and acceptance of responsibility for performance problems are important ethical considerations. Disciplinary issues Disciplining employees is one of the most difficult parts of a managers job. Nevertheless, it is vital to the growth and overall success of the organization. Disciplining employees both ensures productivity and sets standards for the future. Discipline should occur immediately after a problem has occurred. It is imperative that the disciplinary actions remain consistent for all employees. A serious disciplinary issue is sexual harassment where female employees (less so for male employees) are subjected to an unwanted sexual behavior that creates an intimidating or hostile work environment. This includes unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature. This conduct is not only unethical, but illegal as well.

We shall discuss ethical dilemmas related to employee safety issues here.

Employee Safety Issues Every employee is entitled to a safe and healthy work environment. We shall discuss in some details the works of The Occupational Safety and Health Administration (OSHA). OSHA The Occupational Safety and Health Administration (OSHA) was created to ensure the safety and health of America's workers by setting and enforcing standards; providing training, outreach, and education; establishing partnerships; and encouraging continual improvement in workplace safety and health. It is unethical and illegal to force an employee to perform an unsafe task or to work in unhealthy environments. To enforce staff protective standards as well as to reach out to employers and employees through technical assistance and consultation programs, OSHA and its state partners have approximately 2100 inspectors, plus complaint discrimination investigators, engineers, physicians, educators, standards writers, and other technical and support personnel spread over more than 200 offices throughout the country. With some exceptions such as miners, transportation workers, many public employees, and the self-employed, nearly every working man and woman in the nation comes under OSHA's jurisdiction. Even occupational safety and health professionals, the academic community, lawyers, journalists, and personnel of other government entities are served by OSHA. OSHA enforce the safety and health standards by mechanisms such as Site Specific Targeting (SST), Local Emphasis Programs (LEPs), National Emphasis Programs (NEPs), and the Enhanced Enforcement Program (EEP). The OSHA's Enhanced Enforcement Program (EEP) focuses on employers who, despite OSHA's enforcement and outreach efforts, repeatedly ignore their OSH Act obligations, and place their employees at risk. EEP targets cases with extremely serious violations related to a fatality or multiple willful or repeated violations. The objective of EEP is to assure sustained compliance at these workplaces. If an inspection is classified as an EEP, then it may receive, among other things, follow-up inspections, inspections of other workplaces of that employer, and more stringent settlement provisions.

We shall discuss ethical dilemmas related to conflict of interest here. Conflicts of interest Conflicts of interest arise when an employees judgment is compromised due to external influences. These situations present a particular ethical dilemma when the best interest of the employee and the best interest of the company are at odds. Conflicts of interests often arise. A company may specify that an employee must not have any financial interests in a company that has dealings with or competing with it. A conflict of interest situation may not arise out of financial interest. We have to be careful that while we attempt to eliminate a conflict of interests, we do not cause another conflict of interest issue. A recent example is when Mr. Paul Wolfowitz, the previous President of World Bank, transferred his girlfriend out of the Bank to reduce conflict of interest, but because the new terms were too much better than her old terms of employment, resulting him being accused of infringement of code of ethics.

IBM is quite explicit in defining when a financial interest in another organization may lead to conflicts of interest arise. It states: "A financial interest is improper if your job, the amount of your investment, or the particular company in which you invested could -- when viewed objectively by another person -- influence your actions as an IBM employee. In the case of a supplier or alliance company, if you have anything to do, either directly or indirectly, in deciding whether IBM does business with that company, you should not have any financial interest at all in the company." However, most organizations, especially the smaller ones, do not have such clear statements on conflict of interest. It is important that the employees themselves be wary of the dangers if they do not want to get into trouble with their employers or with the law. There is an example of a case that involves two former Boeing employees. Michael Sears was the CFO and Darleen Druyun was corporate vice president. Druyun retired earlier from the Air Force as the No. 2 acquisition executive. It all began with the request by Druyun to Sears for jobs in Boeing for two of Druyuns family members. She was sentenced to ninemonth prison sentence because she awarded a contract to Boeing out of gratitude for the company for employing her and two family members. Sears was sentenced to four months in prison for improperly recruiting Druyun.

We shall discuss ethical dilemmas related to use of corporate here. Use of corporate resources Ethical use of corporate resources requires that employees be fair and honest to their employers. Here are three considerations that fall under this category: Using company letterhead. Employees should not use company letterhead for personal reasons because such use can imply that the information contained in the personal document is supported by the organization. Examples include a letter of recommendation for a former employee written by an unauthorized employee, as well as personal messages that reflect the opinion of the employee and not the company. Using supplies. Unauthorized use of supplies is unethical because it costs your organization money, regardless of the quantity of supplies used. Although taking a box of pens home from the office might not appear to be an ethical issue, it is. Suppose that the box of pens costs the company five dollars. Now consider, that instead of taking the box of pens, you took five dollars out of the petty cash box. Ethically, the two actions are the same. Skewed financial data. Sometimes, an employees compensation is linked to the company s financial performance. One major problem with this approach is the temptation of such employees to skew financial data. It is sometimes possible for an employee to accomplish this in a way that is unethical, although not illegal. Besides being unethical, such behavior can lead to serious consequences when future decisions are made based on the skewed data. We shall discuss ethical dilemmas related to use of corporate here. Use of corporate resources Ethical use of corporate resources requires that employees be fair and honest to their employers. Here are three considerations that fall under this category:

Using company letterhead. Employees should not use company letterhead for personal reasons because such use can imply that the information contained in the personal document is supported by the organization. Examples include a letter of recommendation for a former employee written by an unauthorized employee, as well as personal messages that reflect the opinion of the employee and not the company. Using supplies. Unauthorized use of supplies is unethical because it costs your organization money, regardless of the quantity of supplies used. Although taking a box of pens home from the office might not appear to be an ethical issue, it is. Suppose that the box of pens costs the company five dollars. Now consider, that instead of taking the box of pens, you took five dollars out of the petty cash box. Ethically, the two actions are the same. Skewed financial data. Sometimes, an employees compensation is linked to the company s financial performance. One major problem with this approach is the temptation of such employees to skew financial data. It is sometimes possible for an employee to accomplish this in a way that is unethical, although not illegal. Besides being unethical, such behavior can lead to serious consequences when future decisions are made based on the skewed data.

Ethics in business Ethical dilemmas arise for a variety of reasons in this business world. Four of the most common reasons are as follows: 1. Selfishness 2. Profit

and personal gain pressures 3. Business standards conflicting with personal values4. Cultural differences in global settings Cultural differences in global settings Ethical dilemmas also arise in international businesses. Many companies have their headquarters in the United States, but manufacturing facilities in other countries. Ethical dilemmas might arise if, for example, job conditions that are considered normal in the manufacturing country conflict with labor standards in the United States. A bigger danger can arise when a US corporation sets up manufacturing operations in a third world country and due to the lower expectations or less stringent regulations, lower standards are practiced there. An excellent example is the Bhopal chemical plant disaster in India when Union Carbide (taken over by Dow Chemical) allowed the plant there to deteriorate in conditions until disaster happened killing thousands and left hundreds of thousands affected. International business ethics is becoming very important in view of the globalization of business activity. Companies all over the world have been forced to come to grips with the costs and consequences of unethical behavior that result from cultural differences. There is no true global consensus on what is morally correct.

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Selfishness and Personal Gain

People who put their own interests above those of the business for which they work can become ethical egotists. Such people find the concept of business ethics worthless and often ignore the ethical standards of their company and society. An ethical egotist is one who believes that everyone ought to do what is in his/her own interest. In another word: I should always focus on my ultimate goals and take the steps necessary to attain them. In general, an ethical egotist will make decisions based on the punishment or reward they received for previous decisions. They often believe that such behavior will garner recognition by superiors, advancement, and the acceptance of their peers. One practice carried out by some managers is to reduce the time clocked by employees so as to lower wage bill of their staff. By so doing, his performance in the organization is

shown to be better because he is able to make his subordinate produce more at lower wage cost. For example, it was reported by New York Times on April 4, 2004 "Experts on compensation say that the illegal doctoring of hourly employees' time records is far more prevalent than most Americans believe. The practice, commonly called shaving time, is easily done and hard to detect -- a simple matter of computer keystrokes -- and has spurred a growing number of lawsuits and settlements against a wide range of businesses. ... The pressures are just unbelievable to control costs and improve productivity,'' said George Milkovich, a longtime Cornell University professor of industrial relations and coauthor of the leading textbook on compensation. ''All this manipulation of payroll may be the unintended consequence of increasing the emphasis on bonuses.'' When a salesman achieves good sale, even through unethical sale tactics, he is rewarded financially and given special treatment. He is therefore encouraged to continue to practice such unethical sale tactics. Other salesmen will be tempted to do likewise even though they may have strong reservation about such unethical practice. Ethical egoists are not only not acting according to ethical principles, we shall see that ethical egoistic practice is actually self-defeating to the ethical egoists themselves. Take for example the situation where it is in the best interst of the ethical egoist to trust another person such as her own lawyer, doctor or a loved one who in turn will have to act in her own best interests which may be in conflict of the ethical egoist's best interests.

Profit Pressures

People often act unethically due to the constant pressure to increase profits. They either try to beat competitors or cooperate with competitors through unethical practises. This pressure is worsened by pressure from senior executives or business owners to show greater profits. Investors are wondering whether the intense pressure on CEOs to show profits every quarter, the pressure on their deputies to increase profits compared to previous quarter or previous year, the pressure on accountants and consultants and analysts to help these executives show us the reported moneywhether all of this pressure has inflated the value of their investments artificially. Arthur Levitt, former SEC chairman, Arthur Levitt was quoted as saying "Fierce competition in the marketplace is healthy, but we've seen that the corporate race to beat analyst projections can breed disdain for investors' interests and the law." Instead of selling products and services on their merits, some people engage in false or misleading statements and innuendoes about competitors, their products or their services. Such unethical conduct invites disrespect from clients and even complaints from competitors. It is therefore imperative that all comparisons to competitors and their products and services are substantiated, and that they are complete, accurate and not misleading whenever they are made. Some businesses have been known to pressure suppliers to lower prices below market value. Such practice may provides short-term benefits, may lead to longer term disadvantages because their supplier may not provide as a good service since the profit margin is low and the incentive to maintain the client may not be great. Discussion with competitors on pricing policy, contract terms, costs, inventories, marketing and product plans, market surveys and studies, production plans and capabilities is not only unethical, can be illegal as well. Companies also sometimes engage in price fixing, in which they collude with

competitors to set high prices for their products. Although individuals must make ethical choices, it is also true that they often make these decisions in committees, group meetings, and through discussion with colleagues. Ethical decisions in the workplace are guided by the organizations culture and the influence of others, such as coworkers, superiors, subordinates. In fact, more ethical misconduct is done to benefit organizational performance rather than to satisfy personal greed. Very often, it is the peer pressure or a superiors direct request for unethical behavior that causes the start of an unethical business practices. For example, Betty Vinson, an accountant in WorldCom was asked to inflate quarterly earnings by shifting operating expenditures into capital expenses. However, such a one time request was continued and it later became a mountain of misallocated expenses and bogus accounting entries totaling more than $3.8 billion. As a consequence, she was sentenced to five months in prison and five months of house arrest

Business standards conflicting with personal values All people have their own sets of personal values that come from society, families, religions, and experiences. Ethical dilemmas can arise when those personal values conflict directly with the company s practices. Organizations can manage their culture and ethical climate by trying to hire employees whose values match their own. Some firms even measure potential employees values during the hiring process and strive to choose individuals who fit within the ethical climate rather than those whose beliefs and values differ significantly. A poor fit can have very expensive ramifications for both organizations and employees. Beyond the potential for misconduct, a poor employee-organization ethical fit usually results in low job satisfactions, decreased performance, and higher turnover. We may expect that all individuals employed or associated with the organization will be treated with respect, dignity, and equality. We also expect that the organization that we work for is committed to equal opportunity for all employees, without bias based on differences in culture, ethnicity, colour, religion, gender, sexual orientation, age, marital status, national origin, or handicap. We expect that it provides a workplace free from all forms of discrimination, including sexual and other forms of harassment. However, what if you realize that the organization really discriminates against pregnant women? Even if you yourself may not be affected by such discriminatory practice, you will feel unhappy and angry when a woman colleague loses her job because of pregnancy. You will start to feel that the company is not ethical and you will lose your respect for the organization.

Ethics in Marketing

By Francesca Di Meglio, Monster Contributing Writer Marketing professionals with a backbone reap great rewards, including a solid career with the potential for advancement. But the high road is not always the easiest path to take. You know right from wrong, says Laura Hartman, professor of business ethics at the DePaul University College of Commerce and author of Business Ethics: DecisionMaking for Personal Integrity & Social Responsibility. Whats tough is standing up for it. Sometimes, it takes a lot of courage to be ethical. Making moral decisions also requires intelligence and forethought. Its easy, say professionals in the field, to fudge the truth to make a sale and believe the bottom line will be the better for it. Try telling that to those who were marketing Enron, the defunct Texas-based energy company marred by accounting fraud and cover-ups. Someone was selling the deal, says Victoria Crittenden, chairperson of the MBA Core Faculty at Boston College. We just dont hear about it. But just because the marketing arm of an organization doesnt get as much attention as the finance group, does not mean marketers have free reign. In fact, everyone in business is wise to develop moral fibers, because ethical problems often lead to legal problems, which bite into profits -- not to mention your career ladder. The first step to confronting any dilemma is recognizing the moral dimension of it. Only then can you properly weigh the pros and cons of your options. Here are common ethical dilemmas youre likely to face as a marketing professional and steps to keep your reputation intact: Ethical Dilemma: How Far Can You Go in Stealth Marketing? Scenario: An actor hired by a particular company poses as an ordinary Joe and strikes up a conversation with a potential consumer to praise the companys product or service. Is this fair? Case Study: Dont think this could actually happen? Think again, says Hartman, who

wrote about Sony Ericsson hiring actors posing as tourists to go to the Empire State Building to ask other visitors to take photos of them with the brands cameras. Then, the actors talked up the product. She cites other examples such as companies having publicity hires write recommendations for goods and services on various Web sites without disclosing their employer. These maneuvers, known as stealth marketing, are a hotly debated topic in the industry. Where should you stand? Plan of Action: With an ever more sophisticated clientele, companies are quickly learning that transparency rules todays marketplace. Therefore, experts say your only choice is to be honest and forthright. If you want consumers to sample your product in a natural setting, you can still have them do so. Just let them know who you are and why youd like to talk to them. If the product is a good one, then your honesty should in no way diminish it. Ethical Dilemma: Can You Sell Customer Information? Scenario: When customers shop your online store, they leave an electronic trail that provides lots of information -- from their name and address to the types of goods that interest them when they search the site. A partner company would like to buy the data from you. Should you make the sale? Do you even have the right to use that information in house? Case Study: Telemarketers and junk email are a part of everyday life. Theres no question that someone is passing around contact information. Companies are always looking to get in touch with customers and find out about purchasing patterns, says H. David Hennessey, professor of marketing at Babson College. Using consumer information is a privacy and fairness issue if not a legal one, he adds, because many people think their purchases are anonymous or somehow protected. Plan of Action: Consult the companys code of ethics to determine if standards have already been set about how much information you can use internally and externally, says Hennessey. He suggests you put together a group to create a policy about the acceptable ways to use information consumers share with you. Consider privacy law and the American Marketing Associations set of standards when determining your code of conduct, say experts. Sometimes, the easiest and most effective way to confront such questions is simply to put yourself in your clients shoes. Would you consider the use an invasion of privacy or betrayal? Ethical Dilemma: Should You Recall a Flawed Product? Scenario: You discover a flaw in one of your products, but telling the public might affect sales. What should you do? Case Study: Many a company has had to grapple with this problem. Think of what must go into the decision to recall cars. Pet food makers had to react to the fact that some food was tainted and killing beloved cats and dogs. In 2006, some consumers of Bausch & Lombs ReNu with MoistureLoc contact lens solution suffered from a fungal eye infection, and the companys marketers were criticized for reacting slowly and being close-lipped. Although extreme, these examples highlight the importance of gaining and maintaining consumers trust. Plan of Action: Marketing 101 taught you that your main priority should always be to

focus on the positives of the products and services you offer. However, you have to remember that stakeholders in your company arent just the financiers who birthed the enterprise but are also the consumers who keep its heart beating. If profit maximization is going to lead the decision maker down the wrong path, thats not right, says Kirk Davidson, professor of corporate social responsibility and marketing at Mount St. Marys University in Emmitsburg, Maryland. You can achieve satisfactory profits and do the right thing. Any industry expert will tell you -- just as they did Bausch & Lomb in 2006 -- if your product is in any way harmful, you must be honest, ask forgiveness and take action immediately. Take a page from Johnson & Johnsons handbook. The companys handling of the Tylenol tragedy in 1982, when seven people in Chicago died as a result of ingesting cyanide-laced Tylenol Extra-Strength capsules, is considered the best example of how to handle a product liability issue. The company swiftly pulled the products from the shelves and quelled the nerves of its consumers. Ethical Dilemma: Whats Appropriate in Comparison Marketing? Scenario: Youd like to put out an ad for your client that compares his product to the competition. How far can you go? Case Study: Once you start looking for examples of comparison marketing, you will find them everywhere. Makers of acne medication pit an image of a client using one product, say Proactiv, versus photos of the same person using a rival product to show which zaps more zits. Phone companies are notorious for comparing their services and charges to those of a rival in television ads. Plan of Action: Theres nothing wrong with wanting to show up the competition -- as long as you dont step over the line. Be sure that everything you are publicly saying in favor of your company or product and against your competitor is actually true. Test the goods yourself before committing to any promotional materials. Double and triple check the facts. The bottom line is that inaccuracies in such comparison marketing undoubtedly lead to a courtroom, where your rivals will call you out on your errors. You could lose the big bucks, not to mention the respect of an otherwise trusting public.

How to Solve Ethical Dilemmas in Business

By: Shama l Date: October 16, 2007 4 Comments Recently I made a big purchase on eBay, only to receive fake goods. I contacted the seller, and the seller has offered a full refund but continues to protest that his products are real. A couple of observations here- 1) His auction page states a no return policy. If the goods are indeed "real" then why bother offering me a refund? 2) I found many people complaining about the same seller on various discussion boards. There are two dilemmas in this situation. One is mine as a consumer-Do I accept the refund and say nothing more? or Do I go through the appropriate channels and report this seller so others can be forewarned? He also has a dilemma-Does he keep selling the products that he now KNOWS to be fake? (I had them appraised by an expert) or Does he continue to leverage his power seller status to fool people? My intention with this post is not to solve either of these dilemmas, but simply to focus on the process of solving ethical dilemmas in business. 1) Figure Out your Intention- This is really the first step in solving any conflict (internal or external). What do you hope to achieve from your conflict? Do you wish to clear your own conscience? Do you just want the other side to concede defeat? Your intention will depend on your own personal dilemma. For example, my intention with the eBay dilemma is to warn others of this seller without receiving negative feedback as retaliation from him. 2) Map out Your Actions- It may seem silly to write out your actions but our mind processes thoughts in a more logical fashion when we write them down. Just jot down a few action steps you could take and what the consequences would be for each action. In my case, I can a) Contact eBay directly b) Leave messages warning about this seller on forums c) Leave negative feedback. There is also a consequence for each of my actions. If I contact eBay directly, they may ask me to sort it out with the seller. If I leave messages warning about this seller on forums, it will take up valuable time and may not reach as many people. If I leave negative feedback, he may retaliate and leave negative feedback for me. 3) Cost versus Benefit- In the end you have to analyze the cost versus the benefit of each action. I dont mean just financial costs-any negative consequence can be viewed as a cost. For example, the seller knows that their products are not real. They can choose to continue selling them as authentic but the cost of that would be guilty feelings, a potentially ruined reputation, and just plain old bad karma. (I am a big believer is what goes around, comes around). You have to pick the action with minimal cost. Now, I realize that ethical dilemmas can be very complex at times and this structure is meant to simply guide your process. In the end, it often boils down to the wisest words ever uttered: Do unto others as you would have them do unto you.