Business Ethics – essays

1. Distinguish relativism and normativism. Which one should the

firm apply in its activities?

Scholars and managers examine ethics from two different perspectives. Relativism is the belief that
ethical truths are not absolute but differ from group to group; according to this perspective, a good
rule is, „When in Rome, doas the Romans do“. Thus, a Japanese muntinational firm adhering to the
position that bribery is wrong might nevertheless pay bribes in countries where the practice is
customary and culturally acceptable. Relativists opt for passive acceptance of the values, behviors
and practices that prevail in each of the countries where they do business.

By contrast, normativism is a belief that ethical behavioral standards are universal, and firms and
individuals should seek to uphold them consistently around the world. According to this view,
managers of the Japanese muntinational firm who belive bribery is wrong will enforce thsi standard
everywhere in the world. According to this vies, managers of the Japanese multinational firm who
belive bribery is wrong will enforce this standard everywhere in the world. The United Nations and
other ethics proponents encourage companies to follow a normative approach in their international
dealings, Progressive firms attempt to correct unethical practices that arice in their ongoing business
dealings around the world.

Most frims apply a combination of relativism and normativism abroad. Rightly or wrongly, they strike
a balance between corporate values developed in the home country and local standards. However,
this approach puts them at risk of violating norms that are inceasingly universal. In countries with
questionable ethical norms, it is usually best to maintain ethical standards superior to what is
required by local laws and values. This strategy helps garner goodwill in the local market and averts
potentially damagig publicity in the firm's other markets.

( ovo je teoretska osnova, sad bi trebalo napisati nase misljenje )

2. What is corporate social responsibility? How does it differ from

general ethical behavior?
Most companies seek to ensure ethical practices in their international operations The most advanced
firms proactively empasize not just ethical behaviour, but also corporate social responsibility and
sustainability. Corporate social responsibility (CRS) means operating a business in amanner that
meets or exceeds the ethical, legal, and commercial expectations of all stakeholders, including
customers, shareholders, employees and communites where the firms does buness. Sustainability
means meeting humanity's needs without harming future generations.

In pursuing societal needs, all organizations face constraints on their methods and relusts. For
example, the economics of survival requires each entity to produce the ruslts that generate the
donations, taxes, or profits needed to operate. At the same time these results must be attained by
methods that re deemed acceptable to the larger society. Leaders of all organizations constantly
grapple with the balace between methods and results. When these issues involve for- proftis, CRS
helps businesses balance the means they use and the ends they seek. I does this by ensuring that
profit-seeking businesses plan and operate from the perspectife of multiple stakeholders.

3. Describe the five standards managers can use to examine ethical

dillemas.

Five standars to examine ethical dillemas:

1. Utilitarian approach – the best ethical action is the one that profides the most good or does
the lest harm or, stated differently, procuces the greatest balance of good over harm to
customer, employees, shareholders, the community and the natural envieroment.
2. Rights approach – the decision maker chooses the action that best protects and respects the
moral rights of everyone involved.
3. Fairness approach – suggests that everyone should be treated equally and fairly.
4. Common good approach – suggests that actionas should be based on the walefare of the
entire comunity or nation.
5. Virtue approach – argues that ethical actions should be consisthent with certain with certain
ideal virtues that provide for the full developement of our humanity.

4. What advantages do firms gain from behaving according to high

ethical standards? Explain
• Ethical behavior is simply the right thing to do.

• Often prescribed within laws and regulations.

• Demanded by customers, governments, and the news media. Unethical firms risk attracting
unwanted attention.

• Ethical behavior is good business, leading to enhanced corporate image and selling prospects. The
firm with a strong reputation is advantaged in hiring and motivating employees, partnering, and
dealing with foreign governments. ( moguće da je i samo ova posljednja teza dovoljna da bude
„tačan odgovor“)

5. What is an ethical issue? What are some of the ethical issues

named in your text? Why are they ethical issues?

Business Ethics is the study of business situations, activities, and decisions where issues of right and
wrong are addressed.

List of some businesses ethical issues:

Child labor and low-labor costs

It has long been commonplace for firms to move production and low-skill jobs from their home
countries, to other which offer lower production costs, in foreign countries. Including lower labor
issues, these practices sometimes result in unfavorable publicity and may even expose fundamental
issues associated with potential human right violations. Child labor is one of the most denunciated
practices nowadays. One in every eight children in the world is still subjected to the worst forms of
child labor, which endangers the child's physical, mental or moral well-being. The exploitation of
children through child labor occurs in more than twothirds of all countries in the world.

Discriminations

The United Nations 1948 Declaration of Human Rights promoted the concept that “All human beings
are born free and equal in dignity and rights”. Unfortunately, in the workforce, people are often
victim of discrimination. The discriminations made by companies toward their employees are
considered to be unethical in corporate behaviors. The term discrimination describes a large number
of wrongful acts in employment, housing, education, medical care and other important areas of
public life. Discrimination in employment generally arises from the decisions employers make about
hiring, promotion, pay, fringe benefits, and the other term and conditions of employment that
directly affect the economic interest of employees. Discrimination at work could be sex
discrimination. The Sex discrimination Act 1975 makes it unlawful for an individual to be
discriminated against in the workplace in relation to selection for a job, training, promotions, work
practices, dismissal or any other disadvantage such as sexual harassment. Discrimination is divided
into two main categories, direct and indirect discrimination. Direct discrimination occurs where a
person is treated differently on the grounds of their gender. Indirect discrimination is where an
employer applies a requirement or policy, which though on the face of it has nothing to do with
gender, in practice tends to affect one sex rather than another.

Bribery and corruption

Bribery is the deliberate attempt to persuade someone (usually in a position of power and authority)
to act usually in favor of the briber by offering money or gifts or material gain. Bribery has been the
root of corruption in many countries and is considered an unethical behavior for companies. Bribery
occurs when property or personal advantage is offered, without the authority of law.

Overtime work

Often, companies ask their employees to do overtime, to avoid new employments and often people
are unpaid for these hours. Around 15% of the employees declared that they worked overtime. In
some cases, overtime is an indirect way for companies to threaten their employees. Most of the time
employees show enthusiasm and hold on to their positions within the company. Furthermore,
sometimes the work is exciting and people voluntarily work over and above their regular hours
without asking for remuneration. Employers use the tolerant employee attitude towards overtime
work to their advantage and do not offer payment.

Environment

One of the most modern debates concerning the business ethics is the show of respect for the
environment by the companies. Indeed, companies are often accused to be unethical by the non-
respect of the environment. Companies should respect the environment, either in a legal or moral
sense. Although products produced in an environmentally unfriendly way may appear at first to be
cheaper, the cost to the purchaser is not the final cost. Damage to the environment is paid for by
increases in ill health, and irreversible loss of biodiversity.
Health and safety regulations

Companies do not always health and safety regulations. There are those who employ people in bad
and/or illegal conditions, especially in factories, for example the utilization of toxins and using un-
safe machinery. This is usually to achieve and a high turnover of produce therefore a higher profit.

Animal testing

Animals are routinely used to test the safety of consumer products before their products are
launched on the market. Indeed, this knowledge can be used in the medical field for the benefit of
humans, like diseases. Is this scientific knowledge worth the price of such unethical behavior?

6. Outline and describe the main components of CSR hierarchy.

7. What are the dimensions of E.S.C.S. framework in relation to

strategy and CSR? Briefly elaborate on these dimensions.

For a business strategy to provide asource of sustainable copetitive advantage assumes a marrige of
the firm's intermal strenghts ( its competencies ) with its external ( enviromental ) opportunities. As
ilustrated in Figure 3.2, te multiple arrows show that vision and mission shape strategy. Additionally,
strategy is influenced by both the frim's internal competencies and the demands of the external
enviroment in which it must operate. In turm, stragegy helps influence the organizational structure.
The connection amnont the internal strenghts and the external opportunities in the globalization
business enviroment requies an intimate understanding of both, while implementing the competitive
strategy troung CSR filter. Figure 3.2. shows how the CSR filter fits between strategy and the
enviroment in which the strategy operates.

8. Discuss responsive versus strategic CSR strategies in accordance

to Porter and Kramer's point of view.

Categorizing and ranking social sissues is just the means to and end, which is to create an explicit and
affirmative corporate social agenda. A corporate social agenda looks beyond community
expectations to opportunites to achive social and economic benefits simultaneously. It moves from
mitigating harm to finding ways to reinforce corporate strategy by advancing social conditions. Such
a social agenda must be responsive to stakeholders, but it cannot stop there. A substantial portion of
corporate resources and attention must migrate to truly strategic CSR. It is throuth strategic CSR that
the company will make most significant social impact and rap the greatest busniess benefits.

Responsive CSR compaines two elements acting as a good corporate citizen, attuned to the evolving
social concerns of stakeholders and mitigating existing or anticipated adverse effects from business
activities.

Strategic CSR. For any company, strategy must go beyond best practices, It is about choosing a
unique position – doing things differently from competitors in a way that lowers costs of better srves
a paticular set of customer needs. These principles apply to a company's relationship to socety as
radily as to its relationship to its cuspomers and rialst. Strategis CRS moves beyond good corporate
citizenship and mitigating harmful value chain impacts to mount a small number of initiatives whose
social and business benefits are large and distincive. Strategic CSR involves both inside-out and
outside-in dimensions working in tandem.

9. Explain how variations between industries affect the CSR

threshold. Give an example of two industries with obvious
differences in CSR threshold.

The CSR threshold – the tipping point that triggers companies to move toward strategic CSR: a.
Variations between companies

b. Variations between industries

c. Variations between cultures

The decision of when to implement a CSR policy is compounded by why,where, and how it should be
implemented, not to mention who should oversee the process.

Differnt industries also evoke different stakeholder emotions. For example, a company operating
within the apparel industry may face a higher CSR therhold if it sells unbranded clothing based on
low costs. But the CSR thershold may drop dramatically for a company using a focused differentiation
strategy that offers a „lifestyle brand“ aimed at well-to-do customers who have choices and include
mroe than just cost in their value calculations. If a well-known fachion brand, for examle, is seen as
violating CSR expectations, customerscan quicklyabandon the brand and producst by shopping
elsewhere. But, a large nonbranded producer, particulary one offering just low-cost styles, may have
a much higher threchhold, simply becouse the connection between product, brand and customer
aspirations is weaker.

By comparios, in the financial or banking industry, the CSR therchold may be relatively higher that for
apparel. Here it may be harder for customers to indentify a fictim or accuratley quantify te degree of
harmy caused by any CSR violation. For example, the U.S. mutual fund scandals in 2003 – „One of the
biggest financial skandan in the U.S. history, which has so far implicated 15 mutual funds, 12
brokarage firms, 4 banks, and dozen individuals“ suggests that when it comes to personal finance
the avarage American is more willing to separate etics form personal benefit.
 10. What do „inside out“ linkages mean in the domain of
Porter's value chain? What kind of impact do activities (primary
and secondary) within value chain have on society?
The value chaind depicts all the activites a pomany engages in while doing busniness. It can be used
as a frame-work to indentify the positive and negative social impact of those activities. These“inside-
out“ linkages may range from hiring ang layoff polices to greenhouse gas emissions , as the parial list
of exaples ilustrated here demonstrates.

11. Present and explain two types of physical surveillance regarding

employees and communication privacy.

a) Physical surveillance – employer has the right to know that his employees are working and
when they are not. We have two types: 1) via camera, and 2) via the monitoring of computer
keyboards
 b) Email surveillance – firstly, we have to answer if this is the best mehanism for accomplishing
the company's aims. On the other hand, we have to consider privacy of employees and the
effect of monitoring on morale, actions and productivity of employees.

c) Internet surveillance - many firms have not drawn up clear guidelines for what is and what
is not allowable use with respect to the Internet. For example, whether they are allowed to
use the Internet for their personal needs or wants. Employees have the ethical obligation to
do the work for which they are hired while on the job. It would be stealing time from their
employer to spend hours chatting in chat groups or playing games on the Internet or doing
personal shopping

12. Is it morally acceptable for an employer to inspect the outgoing or

incoming e-mail of its employees? Explain your answer.

Since employees’ computers belong to the firm for which they work and since they are hired to do
certain tasks, the law (or at least court decisions thus far) gives the firm the right to both control the
use of its equipment and the right to the contents thereof. It is therefore perfectly legal for
companies to monitor all the use made by their employees of their computers and to access
whenever they want all the information on the computer, including e-mail.

13. How would you define the scope of workplace privacy rights?

If as a result of monitoring or reading an employee’s email a manager discovers private information

about that individual – a love affair or something else of a personal nature – the manager and the
company have no right to disclose that information to others. Just because the company owns the e-
mail, it does not thereby have the right to do whatever it wants with the contents. Even though the
employer legally owns the contents of employee's cyber activity on the firm's computer , the
individual’s right to privacy precludes disclosure of personal information that has no business
relevance. Specifying actions that are considered by the firm to be improper use seems to be fair
warning of what is not allowable use. The policy should be explicit enough so that ordinary workers
using their common sense know what the company’s policy is.
14. Draw, label, and explain the pyramid of social responsibility. What
are the requirements for a firm if it truly wants to be ethical and
socially responsible?

15. Explain at least 4 ethical concerns that are related to marketing

research.

•Invalid or unreliable research studies

•Invasion of consumer privacy, not respecting confidentiality

•Failure to secure voluntary and informed participation

•Competitive intelligence gathering

•Consumers are concerned about privacy, and Internet has increased privacy concerns

• Selling of address lists.

• Ease with which consumer information can be gathered.

16. Explain at least 4 ethical concerns that are related to packaging.

• Larger packages are more noticeable on the shelf.

• Oddly sized packages make price comparison difficult

• Actual versus apparent size

• Excessive or environmentally-unfriendly packaging

17. Explain at least 4 ethical concerns that are related to promotional

activities.

• Marketing to children has come under increased scrutiny.

• Marketing beer to college students, including through providing promotional items such as shirts
and hats, raises ethical questions.

• Controversies with marketing tobacco products

(ne mogu naći niti se sjetiti četvrtog)

18. Explain at least 4 ethical concerns that are related to pricing

strategy.

-Deceptive Pricing: Where a salesperson tries to influence lure customers into a store. Thereafter, a
salesperson tries to influence to buy a higher-priced item.

-Unfair Pricing: When competitors are driven out by low prices the company raises price back to
their former level.

-Price Discrimination: It can be unethical if similar buyers are charged different prices for the same
based on their ability to pay.

-Price fixing: It is an agreement among firms in an industry to set up prices at certain levels. Two
types of price fixing: •Horizontal price fixing •Vertical price fixing
19. Identify and discuss the many challenges of being ethical and
socially responsible sales person. Focus on challenges at both the
individual (employee) level and the managerial level.