Business Ethics

| February 13, 2016

Business Ethics


Present the development of your ethical awareness and reasoning through an annotated portfolio of evidence supported by a 1500 word essay in which you first willidentify an ethical dilemma in a business situation, and then suggest ethical solutions to this dilemma (see specific marking sheets at end).

Portfolio Weighting

Ethical Dilemma Essay (Part A) (1500 words) (50%)
Portfolio of Evidence (Part B) (1500 words) (50%)

Part A: Ethical Dilemma Essay (1,500 words)

Students are to identify and discuss a business-related ethical dilemma. Ideally, this choice should be relevant to your intended area of future employment. You must demonstrate both an awareness of the key issues surrounding why it is an ethical dilemma, and then propose solutions to that dilemma. A suggested format for the essay is:

• Ethical Dilemma Description (300 words)
• Justify why it is an ethical dilemma in a business situation (600 words)
• Ethical solutions proposed by the student to this dilemma (600 words)

Part of the learning experience of this essay is for you as the student picking and developing the dilemma yourself from either a relevant recent news event, personal professional practice experience (particularly for students who have been on placement) or similar.

The Chosen Dilemma

VOLKSWAGEN “Engine Mis-management”

Volkswagen’s CEO, Martin Winterkorn, admitted that VW had a “defeat” line of code in the engine management system of 1.6 and 2.0 litre diesel engines. This meant that their diesel-engined cars and vans would pass stringent US pollution checks in testing laboratories, but would release the engine to be more fuel-efficient (but more polluting) on the road. Winterkorn has now resigned and investigations are underway in the US and EU. Can you imagine a DECISION-MAKER somewhere in the VW supply chain who failed to WHISTLEBLOW about this? What Moral Intensity did they feel when deciding to keep quiet? Who were the STAKEHOLDERS that influenced their DILEMMA? Which Normative Theories might have made this a DILEMMA for the DECISION-MAKER?

(Note that there is no need to anonymise the company chosen in the essay)
Assessment Criteria

Programme Goal: Aware of ethical issues impacting on business and professional practice
Objective 1: Identify an ethical dilemma in a business situation

Performance Area Exceeds Standards (7-10)
Student demonstrates an understanding of the relationship between how the dilemma is understood and the options available for decision-making
An excellent understanding of the relationship between the ethical dilemma and appropriate decisions. Outstanding criticality is displayed in the selection and application of decisions.

Student demonstrates an understanding of the impact of relevant contextual factors (e.g. competitive conditions, codes of ethics.)
An excellent understanding of how relevant contextual factors impacts the dilemma options. Factors are critically evaluated in order to justify their impact.
Student demonstrates an understanding of the stakeholders that are potentially impacted, and themoral intensity experienced by the decision-maker(s) dealing with the business ethical dilemma.
An excellent understanding of how stakeholders are potentially impacted. There is an explicit, concise and informed understanding of how ethical dilemmas and the moral intensity experienced by decision-makers are linked.

Programme Goal: Aware of ethical issues impacting on business and professional practice
Objective 2:Suggest ethical solutions to this dilemma

Performance Area Exceeds Standards (7-10)
Student demonstrates the ability to make a recommendation supported by appropriate reasoning.

Provides a systematic and analytically rigorous account of the solution to the dilemma. This is supported by outstandingly convincing evidence, showing an excellent understanding of the relationship between resolution, and normative standards.
Student demonstrates an understanding of the normative ethical theories used to address the dilemma, and can apply descriptive ethical frameworks in their analysis.
An excellent range of frameworks and theories are considered in addressing the dilemma. Outstanding appreciation of the way in which theories and frameworks impact on the decision.
(Also, please indicate what stages of cognitive moral development should be based on the suggested solution)
Textbook used as reference: Crane, A & Matten D (2010) Business Ethics Oxford University Press (3rd Edition)
Part B: Portfolio of Evidence Contents

The portfolio contents should provide evidence of your diligent engagement with the module activities including the directed learning opportunities. Your portfolio should be divided into clear sections, with the appendices clearly marked A, B, and C so that your examiner can easily find and mark your evidence. A summary of our expectations is provided below:
Appendix A: The Ethical Leadership Debate (see attachment below of Appendix A) (20% of marks)

A reflective statement of 600 words which describes and critically evaluates the arguments presented in the debate on Ethical Leadership. Your argument must culminate in your opinion regarding the debate motion. We expect you to analyze the arguments (for and against) made by the teams on behalf of their characters in your seminar. We are not asking you to write an essay purely based upon the character biographies that we supplied for debate preparation.

Marking Criteria: Ethical Debate Exceeds Standards(7-10)
Identifies and isolates arguments and evidence used in the seminar both to support and to oppose the view that ethical leadership can be demonstrated in shareholder owned companies. An excellent ability toIdentify and isolate arguments and evidence used in the seminar both to support and to oppose the view that ethical leadership can be demonstrated in shareholder owned companies.
Critically evaluates the arguments and evidence to reach a conclusion drawing on a range of sources. An excellent ability to critically evaluate the arguments and evidence to reach a conclusion drawing on a range of sources.
Appendix B: The Seminar Case (see attachment below for Appendix B) (20% of marks)

A reflective statement of 600 words concerning the seminar ethical dilemma case which was discussed in the seminar. Briefly identify the ethical dilemmas in the case, and then select one for analysis using the normative ethical theories and descriptive frameworks taught on this module.

Marking Criteria: Ethical Dilemma Exceeds Standards(7-10)
Identifies ethical dilemmas in the case. Whose dilemmas were these and what were their options? An excellent ability to identify ethical dilemmas in the case. Whose dilemmas were these and what were their options?

Uses normative ethical theories (e.g. Deontology) and descriptive ethical frameworks (e.g. Stages of Moral Development, Stakeholder Salience, Moral Intensity) to analyse one of the identified dilemmas in depth. An excellent ability to apply normative ethical theories (e.g. Deontology) and descriptive ethical frameworks (e.g. Stages of Moral Development, Stakeholder Salience, Moral Intensity) to analyse one of the identified dilemmas in depth.
Appendix C: Interpersonal and Team-working skills (10% of marks)

A reflective statement of 300 words showing how your interpersonal and team-working skills were used in this module.
Programme Goal: Skillful in the use of professional and managerial techniques and processes
Objective:Demonstrate effective interpersonal communication and the ability to work in a team

Performance Area Exceeds Standards (7-10)
Student shows the ability to reflect on their use of interpersonal communication and team-working skills in the module.

An excellent reflection which considers whether the need to use interpersonal communication and to work as a team has influenced their understanding of ethical issues.
(Please include the communication skill gained through the debate session as well)
Guideline Appendix A

Character Profile (1)
Mike Gustavsson
Mike is a retired lecturer from Malmo, Sweden. For years Mike taught Business Ethics at a well-regarded University for many years, and has been an active member of Greenpeace since 1992. Mike believed for many years that ethical behaviour of corporations is set by the behaviour at the top of the organisation, if you have good people at the top of the company, making good decisions, and using good rules, then the company itself will be ethical. Mike for many years argued that a virtuous set of rules for directors, and effective oversight of these rules, were key to producing good behaviour.
Unfortunately in recent years Mike has become a little disillusioned with this viewpoint. Mike’s daughter Anna graduated from the Stockholm School of Economics in 2005 and has since quickly risen to the role of a hedge fund manager at Alfaraft AB (an international profitable hedge fund). Mike has found himself in fierce arguments with his daughter who, since taking on the job, has changed greatly in his eyes. To him, she has changed from someone who used to care about the environment and social problems, to someone who works tremendously long hours and now seems utterly focused on her next bonus payment. Worse (to Mike), now that Anna is a part of management, Anna seems to be strongly espousing (advocating) is “get-rich-quick” bonus making message to her subordinates.
Mike is aware thatAlfaraft AB has a well-written corporate ethics and governance code, and even donates to several local Swedish charities, but now wonders at what kind of company they are. Mike was at first extremely happy that his daughter had a good job, but now he’s worried at the type of business environment which is generated at companies which takes idealistic young graduates fresh out of Business Schools and turns them into bonus seeking executives. Where are these good governance guidelines acted upon, how is the company actually led? Why do young executives seem to “mouth” the words of corporate codes, but not act the actions?
Mike participated in his first Occupy protest on 16th October 2011. The protesters occupied the ground floor of theAlfaraft AB building in Goteberg, Sweden, in protest of their heavy financial investment into major companies who were supplying dubious third world regimes.
Preparation Questions

• What is your analysis of Mike before coming to the class?
• What sort of definition of ‘ethical leadership’ might Mike use?
• In Mike’s eyes, what should the role of codes of conduct and good corporate governance be?
• From Mike’s point of view, what is the importance of ethical leadership?
• Does Mike see a tension between the companies’ shareholders and ethical leadership?
• Do you think Mike believes Ethical Leadership should be taught at Business Schools?
• Does Mike believe that Business Schools can or should create ethical leaders?
Which normative ethical theory (or theories) do you associate with Mike?

Character Profile (2)
Jan Edwards
Jan is the CEO (Chief Operating Officer) and founder of Clean Solutions Inc., an industrial building maintenance company (largest are major heavy chemicals companies) based in Kansas, Missouri with substantial operations across seven states in the Midwest of the USA. Jan employs a total of 927 people in a business she founded after finishing her Social History degree in 1997 at University of Kentucky. Clean Solutions Inc. has fifty shareholders, mainly local small Kansas investors, and Jan is very proud that these investors have been well rewarded for their initial trust in her.
Jan is an active member of the True Vine Baptist Church, and through this, she has become involved in a programme to provide educational facilities in Guatemala. Given Jan’s success as an entrepreneur and small businesswoman, she often finds herself donating her time to advising Guatemalan small businessmen on how best to manage their businesses to encourage job creation in the local Guatemalan region. With her husband Ken and their four daughters Jan has made five trips to the villages around Petapa in recent years. Jan feels passionately that people gain self-respect, self-reliance and self-motivation through gainful employment, and she sees the act of entrepreneurship, and the creation of new job opportunities, as a powerful step towards helping the Guatemalan people. Jan for many years has ran programme at her workplace to encourage workers at Clean Solutions Inc. to donate their time to helping people more disadvantaged than herself, and she is proud that last year her company donated a total of 1020 working days of time to charitable works, more than one day per employee (the company doesn’t market or advertise this fact).
Jan has become increasingly concerned in recent years at the nature of graduates she is employing out of business schools onto her in-house graduate development programme (the internal management scheme). Many of the graduates seem extremely focused on profitability and working their way up the company ladder rather than on good people management skills, being well-rounded citizens and good, genuine people. Jan feels let down by the educational system, and business schools in particular, who seem to be geared to producing graduates who are merely “meat-for-the-grinder” for larger international companies who are utterly focused on shareholder wealth development. Jan has commented to her Vice-President of HR on a number of occasions that these graduates seem “institutionalised” before they even get to her. Schooled in thinking of the functional areas of a business, on profit, wealth and budgetary systems, and they seem ignore the importance of the first word “good”, in the words “good businessperson”.
Jan’s Vice-President of HR has made it clear to Jan that these new graduate managers are amongst the lowest contributors to the company’s charitable time donation scheme, donating only a quarter of the time, as a grouping, when compared to the whole workforce. Jan sees it as her duty as CEO to change this trend.
Preparation Questions

• Your analysis of Jan before coming to the class
• What sort of definition do you think Jan would use if she was to describe an ethical leader?
• What is the importance to Jan of Codes of Corporate Conduct to how businesses should be run?
• Do you think Jan believes that “ethical leadership” and “being a businessperson” can work together?
• Jan’s charitable time donation costs money; do you see any conflicts of interest?
• Would Jan see any conflicts of interest?
• Which normative ethical theory (or theories) do you associate with Jan?

Character Profile (3)
Mei-Hua Felung
Mei-Hua is a successful Senior Manager at International Pharmaceuticals Company WCP, one of the largest firms in the world (Headquarters Luxemburg for tax reasons). A successful Accountancy graduate of a leading UK business school she was delighted to accept an invitation to come to an Alumni event recently where she was asked to participate in a debate on whether her business school should continue the teaching of ethics and ethical leadership to students.
Mei-Hua feels strongly on this issue. She feels that professionals have had in recent years a very poor and negative image from the press as to their ethical conduct. While she won’t argue that accountancy in particular has deserved some of the bad press it has received, she feels this has gone too far in many cases. Accountancy as a profession has strict codes of conduct and strict rules, and Mei-Hua has always adhered (worked within) these rules, and she believes both she, and her fellow professionals are very ethical and moral people who are being treated unfairly. In her company, for example they have a strict corporate code of conduct, especially on financial issues such as fraud, and she has always been impressed at the way that this code of conduct is reinforced in corporate induction and in the company literature.
Mei-Hua believes that many people are actually unaware of how ethical some companies actually are, or at least, they are highly cynical. The Directors of WCP have an engagement strategy with charities in a number of third world countries, and while they do use this extensively in their marketing literature, Mei-Hua sees no harm in this, after all, it is the shareholders money. Mei-Hua believes that strong ethical codes of conduct and strong codes of professional behaviour lead to a more moral and ethical business, and that profit and wealth generation, as well as those ethics, can work alongside each other.
Mei-Hua is sure at the debate that a recent tax case which was in the news regarding WCP will be mentioned. WCP recently had to come to a large settlement with the US Government’s Internal Revenue Service (IRS) regarding a certain scheme, and paid a $7bn out-of-court settlement to prevent the case going to prosecution. As a Senior Manager and Accountant at WCP Mei-Hua has been involved in developing a number of entirely legal (never prosecuted successfully) tax avoidance schemes which have saved the company literally millions in potential tax payments, routing transactions though tax havens such as Hong Kong, Dublin and Singapore. Mei-Hua believes there is nothing wrong with this. It is governments which create the tax rules, not her. She and the other accountants are merely “playing within the rules”; not breaking them.
Preparation Questions

• How do you think Mei-Hua would describe “ethical leadership”?
• Mei-Hua clearly puts a lot of faith in Corporate Codes of Governance and Professional Codes of Ethics. What is underlying her arguments? Do her arguments have merit?
• Mei-Hua does believe that Ethical Leadership and moral business behaviours can work side-by-side with shareholder interests. Are there any problems you can see in her argument?
• Does Mei-Hua working as a tax accountant prevent her from being a moral person?
• Mei-Hua is able to stay within the codes of conduct of the company, and her professional accountancy codes of conduct and the legal parameters (limits) of international tax codes and save the company millions (possibly billions) in tax payments. Should she be praised for this? Is this moral? How does this balance against the codes themselves?
• Mei-Hua is a Senior Manager, is she also an ethical leader setting an example to her sub-ordinates?

Character Profile (4)
Deshi Chen
Deshi was born in the Lincang, in Yunan Provience of China near the border with Laos. The city has a population of nearly 2.3 million and its economy grew last year by 15%. Deshi’s parent’s dream of him working one day for one of the major international companies which have been setting up joint ventures in the city, and Deshi himself desperately wants to gain an education to get a good job. Deshi, who is 20, is concerned that without a good office job he will never be able to provide a stable home environment to start a family, and that he’ll not be attractive to prospective fiancées. Deshi’s parents are the first of their family to have reached a comfortable “middle class” lifestyle, and Deshi’s Dad has worked hard all his life as a factory foreman (frontline supervisor) to provide for his son. Deshi’s grandparents are both uneducated farm workers, and while he and his family provide as much care and support for them as they can, they also serve as a constant reminder to Deshi and his family of their humble beginnings. Deshi has worked hard all his life in his education, and has tried hard to build himself some good business experience doing office gopher work (go-for) in the city during his summer. Deshi’s parents have saved a long time to send him to a western UK-based university Business School to finalise his education, and they hope that Deshi can gain both the language and business knowledge there to get him that all important job in the city.
Deshi has become a little dis-illusioned with one of his courses while at this UK university however; Business Ethics. Simply put, he doesn’t see the point of it, and he doesn’t see why it should be on the curriculum of a business school. In his summer job in the city Deshi often saw the “cut-and-thrust” of modern business, and he can’t remember anyone pondering long philosophical words while there. Deshi can’t see the point in wondering about “ethical leadership”. To Deshi, leadership is about getting things done and creating a profitable, successful business. Deshi can’t see the point of these various “codes of corporate governance” as they seem constraints that get in the way of good business. To him some of these even seem ludicrous (ridiculous), why would someone intentionally sign up to codes which will stop you making money? Anyway, to Deshi anyway, the bottom line is that “everyone knows” that western companies are hypocrites who say one thing and mean another when they operate in China. Profit and market share are what are important, and being a profit making manager is what will take Deshi from being a new graduate starter in an office job at a big company to being a well-paid middle exec.
In short, Deshi is unhappy at the teaching of ethics, and ethical leadership, on his degree course, and would like to express that unhappiness in an upcoming debate he’s been asked to participate in. He’s in danger of failing this Business Ethics course, which, to him, seems to have very little to do with “real business”. If he fails this course, he knows he’ll be endangering his degree as well, which means not only the end of that dream of that that nice safe office job, but especially the dream of being attractive to a prospective fiancée because of that job. Deshi doesn’t see why those dreams should suffer because of this “pointless” ethics course, and would like to see it removed from his programme of study.
Preparation Questions

• Your analysis of Deshi before coming to the class
• Other than, “annoying thing which get in the way”, how do you think Deshi would define “Ethical Leadership”?
• Consider Deshi’s view of the importance of Codes of Corporate Governance. Do his views have any merit? If so, what?
• Deshi clearly seems to believe that there is a conflict between “real business”, the pragmatic business which is done in the “real world” which creates wealth for shareholders, and ethics. Does he have a point? What is that point?
Deshi clearly feels that Business Ethics is pointless to him, and won’t help him in the “real world of business”. Why does he think that? Do his arguments have any merit?

Guideline Appendix B

The Case of the Holiday (based on actual events)
This case concerns a young medium sized advertising agency in Germany. It had had grown rapidly in the four years since it was founded and had just opened a new office in the US. The company operates in a highly competitive market in which failure to meet customers’ deadlines incurs substantial penalties. Work is almost exclusively project-based, in a high pressure but largely informal environment where teams predominate and hierarchy is little in evidence. The company pays well, and its employees are highly skilled, overwhelmingly graduates and equally overwhelmingly young with over 35 year-olds a rarity.

Employees work an average of 50 hours a week and when deadlines are tight some arrive as early as 5 a.m. and leave as late as 1 a.m. If there is a personnel ‘problem’ it is that turnover is high. Employees tend either to be dismissed quickly after their unsuitability emerges or leave voluntarily after only two or three years. While there however, involvement and ‘ownership’ of tasks is evident and employees enjoy a culture which emphasizes working hard and playing hard. Much of the employees’ social time is spent, unsurprisingly, with other employees and strong bonds of friendship have developed between staff.

The company is privately owned by its two founders who work from their German Head Office. Employees are not represented by a trade union. Unlike publicly limited and/or government organizations where a variety of stakeholder organizations can be identified and corporate governance may be contested (by shareholders, government, regulatory authorities, consumer associations, trade unions, pressure groups and so on), internal relations here are far clearer and the voices that count are those of management and customers.

The incident that forms the focus for this case concerns an Account Executive, Borries, who was due to go on holiday in a month’s time for two weeks at his girlfriend’s home in Hong Kong. This was an important holiday, especially because Borries only took one week’s holiday throughout the previous year and because his girlfriend Swee Lan would be returning to Germany immediately after the holiday to continue her studies. This was therefore an opportunity for Borries to meet Swee Lan’s parents and to experience her environment for the first time.

About a month before the holiday Borries’s manager called him in for a meeting and told him the news that one of Borries’s clients had to bring forward their product launch as they had heard that a rival was launching in the week that was originally scheduled. The new product launch would be in the middle of Borries’s holiday period. Work would need to be brought forward on the design of advertisements, campaign roll out, viral marketing, web support and so on.

The manager at no point suggested that Borries would face sanctions for taking his holiday, nor was his right to it contested but the manager did say emphasize the importance of the client and the high regard they had for Borries’s work. If this launch was a success then they would likely generate further contracts. After a difficult conversation with Swee Lan, who told Borries that her parents would be very upset not to meet him for at least another year, Borries cancelled his holiday. The company reimbursed his costs in full.

It was only then that Borries’s friends from the company found out what had happened. Borries could not believe their reaction. They argued that he was wrong to give up his holiday. His friend Marcus said: “Borries, you are a coward. They had no right to ask you to do this and you were too weak to say no. You have jeopardized your relationship with Swee Lan and let us down. How are any of us going to be able to say no if we are asked to give up our holidays now? You are supposed to be a friend. You have given so much to this company, the least they could do is to get someone else to cover your work.”

Borries replied: ‘I was just trying to do my best. I have been working on that account for a long time so how can I leave it at the end of the project? Don’t you understand I have to balance what is right for the company and the client against what is right for everyone else and in this case giving up my holiday is better than letting down the client. So get off my back.”
Reference that can be used for both PART A and PART B:

• Textbook used as reference: Crane, A & Matten D (2010) Business Ethics Oxford University Press (3rd Edition)

• Components of Moral Intensity

• Stages of Cognitive Moral Development

• Normative Ethical Theories
• Stakeholders Salience

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