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Business Ethics Of Organisations


1. 1 Meaning of Business Ethics

Business ethics will be the moral ideals, norms or moral specifications which determine and govern the business methods and decisions. It is an applied ethics which deals with the factors of business environment, corporate and business issues in the organization and executing business in an honest way fulfilling the prospects of stakeholders. (Velasquez, 2001)

1. 2 Characteristics of highly honest organisation

They have distinct vision and targets.

They focus mostly on the interests and fulfilling the needs of the stakeholders and connect to them constantly.

They provide quality of goods and services timely through their every do.

Every individual of the organization is accountable for his/her professional obligations and work duties.

(McNamara, n. d)

Johnson and Johnson is an exemplory case of the highly moral organization.

1. 3 Teleological and Deontological Theories

The teleological theory states that if the final results of an action are suitable then the action is acceptable and morally right whereas if the final results are not desired then your action is unacceptable and wrong. Additionally it is called as the consequentialist theory because the decision of whether a specific activity is morally right or wrong is based on the finish or the purpose of that activity.

On the contrary, the deontological theory suggests that the activities are acceptable if the guidelines or the guidelines under which those activities are conducted are morally right. Additionally it is called as the non-consequentialist theory or strategy. Deontologists claim that the judgement regarding an action is performed not on the basis of implications of the action but based on desirability of the main principles. In addition, they said that people have duty to execute certain acts following a set of morally acceptable rules no matter its benefits. (Crane and Matten, 2007)

Critical Research of views of David Rosser and Dr Barry Morgan

Analysis of the views of David Rosser

"Business reputation has been on a downward craze for too long and is a concern to a growing number of business market leaders. . at the same time of increasing transparency and swift dissemination of information, moral business standards will progressively more be critical to gaining and keeping a licence to use from customers and employees. " -David Rosser

2. 1. 1Ethical Environment for any business enterprise

An corporation can run efficiently if it complies with the honest norms and beliefs of the culture and functions by gratifying the ethical benchmarks of business. It should respond and respect the eye of its stakeholders such as shareholders, general customers, employees, suppliers, business associates, lawyers, creditors, finance institutions, government and interpersonal groups etc. Trustworthiness of the organization also depends upon the level of the trust that the stakeholders have on the organization. It will ensure that whether the professionals and employees at different levels of management are fulfilling their tasks ethically or not. (Brooks and Dunn, 2009)

The group is accountable for each activity that this conducts. If it does not satisfy the anticipations of stakeholders then it will negatively affect the business itself. If the necessary actions and sensible decisions aren't made at the right time then it could collapse from the industry. Examples of such companies are Enron, WorldCom and Arthur Anderson. (Anon, n. d)

Enron, the 7th most significant company in america, was found guilty for concealing its real revenue and accused for not revealing its debt and cancelled tasks in its accounts. It was bankrupted because of the unethical business techniques in the year 2001. (Anon, 2002).

2. 1. 2 Analysing business ethics with a approach

An integrated approach involves taking business decisions considering various aspects of the business enterprise like the economical, legal and moral factors. This process can be best explained by analysing the response distributed by Johnson and Johnson to Tylenol problems.

Tylenol is one of the well renowned products of Johnson and Johnson. In the entire year 1982, it encountered severe obstacle as the record explained that several people died in Chicago after eating extra-strength Tylenol. The company got immediate action and quickly cleared the bottles of pills from the stores in Chicago and recalled those which were identified as septic. It responded to the public concern effectively and suspended the advertisement of the Tylenol temporarily. Following the first death in this case was identified the business made a recall of the 31 million bottles of the regular as well as extra power Tylenol that were unsold from the complete nation. In order to save the brand name of Tylenol business strategies were redesigned. However, the major matter was on the welfare of the consumers. After two months, it launched the improved form of the pills in a fully guarded i. e. "Tampered tolerant" form in the month of November, 1982. Soon the business could gain the confidence of the clients. The public became aware that the company was a victim of a senseless crime. It had been successful in attaining this aim since it had relished the goodwill from the public for more than a decade. It's been able to establish strong connection of rely upon the society as it has used its credo and could take right decisions at the right time. (Boatright, 2009)

From the above analysis the statement distributed by David Rosser can be justified and we can say that it's important for any business enterprise to check out the ethical business specifications to get authorization from its stakeholders then only it may survive on the market.

2. 2 Differences between the views of David Rosser and Dr Barry Morgan

'Dr Morgan believes an oath for people that have the MBA, which lays out a code of principles like the Hippocratic Oath does indeed for doctors, would aid in responsible leadership running a business. '(Anon, 2011)

MBA graduates will be the future business leaders. They must be aware of every business and ethical issues. Dr Morgan emphasized that they have to take a formal Oath which comprises of the group of the moral business standards. It'll compel these to be honest towards their tasks and help in establishment of the effective control.

After analysing the business trend, it's visible that lots of companies collapsed as they failed to stick to the ethical specifications. Also, the recent bank crisis badly affected the world overall economy. The bank culture of distributing great deal of add-ons to the bankers even when they are getting huge salary and the MPs' scandal of misusing their allowances and expenditures have created anger among the general public. Thus, Dr Morgan said a change is must in the business world. These incidences proved that immediate activities are needed to be used and every business organization must be aware about conducting their activities ethically.

"The MBA oath is something worth considering because in the end conventional legislation cannot cure moral blindness or rule out greed. " -Dr Barry Morgan

The variations in conception, personal beliefs and values have important impacts in the professional decisions of the business workers. Therefore, oath is essential as it operates as a set of standards or concepts based on which any business staff conducts his/her functions and calls for professional decisions.

To achieve financial success an organization might not follow the moral standards and it is where the importance of effective authority is required that could lead the organizations complying the rules and standards of the Oath.

The view of Dr Barry Morgan is deontological. He emphasized that MBA graduates should take Oath so that the business decisions are made ethically and business activities are conducted accordingly.

David Rosser, a director of CBI Wales, stated that as of this age of technological advancement the business enterprise position and the financial status of a business are noticeable to the public. It should take action ethically in performing its business functions to fulfill the expectations of the stakeholders.

"The business enterprise activity which generates those revenue must be moral, and where based on taking of high risk, the results of failure must show up on the shareholders and the ones employees - not on the general public tote. "- David Rosser

He argued an organization must act ethically in ways of profit era. If an enterprise fails due to the risk factors then your implications must be borne alone not by the general public. Because of the banking crisis open public suffered huge reduction in their investment for example many companies like Enron, Worldcom, Lehman Brothers, Basic Motors, Washington Mutual and Refco Inc. bankrupted. However, he mentioned that the payment of bonus items to the bankers is no immoral take action because the lenders must reward their workers and whenever the lenders think of making repayment to anyone they firstly consider their employees and executives. The primary reason behind this is that by using their expertise the banks have been able to function and they have been dealing with the financial meltdown.

The main concern of David Rosser is that the business activities which help to grow the business enterprise organization need to be ethical to get the support and acceptance of the stakeholders so that the group can run efficiently. He didn't give much importance to whether the business professionals are receiving high level of bonuses or not. The declaration of David Rosser keeps the view of teleological notion.

But after analysing the views of Dr Barry Morgan we can say that the reward the bankers are getting must be reduced as the amount can be committed to the tiny business industries and the business leaders must follow the set of standards of business ethics which is stated in the Oath.


Hippocratic Oath used by the MBA graduates


Business Activities and decisions


Fulfilling the prospects of the stakeholders and getting success in the business

Non-consequentialist Ethics

Consequentialist Ethics

Fig: Consequentialist and Non-consequentialist Theories

Source: Crane and Matten, 2007


In the present business situation, it's vital for almost any business enterprise to follow the ethical specifications and it ought to be in a position to fulfil the objectives of its stakeholders to survive and run the business enterprise successfully. It creates the society aware of the development in the business environment and addresses the questions of what are wrong and right business activities and decisions. It serves as a base to analyse the causes and implications of the business malpractices and reduce its negative effects on the overall people.

The views of David Rosser and Dr Barry Morgan are analysed in this report and contrast is also made. Dr Barry Morgan presumed that in this competitive business age, the success of any business enterprise could not be judged only on the basis its profit. The most recognizable and vital factor is the level to that your enterprise adhere to the moral business standards. In the conference of Career Wales Group, Dr Barry Morgan said that the reward culture of the lenders to the bankers is immoral and all the MBA graduates should take the Hippocratic Oath as taken by physicians in order that they fulfil their obligations complying with the rules of business ethics. His views are based on the deontological theory. Alternatively the views of David Rosser are teleological. He said that payment of bonus deals is not immoral and offered importance to the honest business activities that helps in creating profits for the business organization.

4. Recommendations

Dr Barry Morgan resolved that financial crisis, the benefit culture and bills scandal of the MPs' proved a decline in the moral worth of the business enterprise professionals. The Hippocratic Oath that is considered by the MBA graduates will help in the establishment of effective authority in the business world. This will enable those entering the business enterprise world to act ethically in their business dealings. In fact, it will work as reminder and motivate these to be consistent with their duties ethically time and again.

In 2009 the students of Harvard Business University had taken the Oath that they will serve for the betterment of the world. If the business schools comply with the Dr Morgan's suggestions then this will bridge the difference among the programs that the students learn and the real business practices. It's important to learn the rules based on which real business community functions. Thus, every business classes must have such provision so that those starting their job can have understanding on the principles and key points of the business. Further, it generates foundation for taking the ethical business decisions. With this highly competitive market where honest business norms have been neglected following such provision is effective and vital.

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