Business ethics as contemporary management topic - Term Paper Example

Table of Contents Table of Contents Rationale behind Selecting Business Ethics as Contemporary Management Topic 3 Business Ethics 5 Objective of Business Ethics 5 Importance of Business Ethics in Business Environment 5 Theoratical Pespective 6 Descriptive Business Ethics 6 Normative Business Ethics 6 Impact of Business Ethics 7 Business 7 Social 8 Economic 8 Legal 10 Ethical 10 Immoral Management 10 Amoral Management 11 Philanthropic 11 Conclusion 11 Works Cited 12 Contemporary Management Topic Contemporary management issues can be understood from the standpoint of business ethics and learning organization theory. Business ethics concept has been used by many academic scholars to distinguish between successful and unsuccessful organizations. Academic scholars believe that business ethics can not only ensure organizational but fillip sustainable business growth also. Rationale behind Selecting Business Ethics as Contemporary Management Topic The study has selected business ethics in order to continue further analysis. Business ethics has emerged as an important management issue for companies in recent time. The study has selected business ethics in order to understand following learning outcomes: Many companies (read Nortel, Enron, Layman Brothers and others) have suffered the ill effect of poor business ethics in last two decades hence discussing contemporary issues related to business ethics can help the authour to gain knowledge about organizational sustainability. Business helps the organization to build sustainable representation in front of their stakeholders. Unethical business practice creates negative impact in the mind of both shareholders and stakeholders. In many cases it has been observed that government of a particular country takes legal action against organizations practicising unethical activities such as bankruptcy, fraud, misrepresentation of financial asset or fraud. Legal action against unethical organizations not only purturbs sustainability of them but negatively impacts shareholder’s interest. Studying business ethics will help author to understand importance of organizational sustainability in terms of financial perspective. Many companies of USA have understood importance of business ethis hence they have created ethical assistance lines for stakeholders to report ethical concern about business practice to them. Following diagram will show increase of concern related business ethics in recent times. (Source: Ferrell, Fraedrich, and Ferrell 222) Business Ethics There is a vast gap between ethics and self interest in the business practice. Many business executives emphasizes on self interest in order to fulfil personal prosperity instead of doing business for betterment of society. Objective of Business Ethics In 2003, Hooker has pointed out that main objective of business ethics is to create a guideline for companies to compete and sustain in the market without getting involved in financial fraud or any kind of deception. Importance of Business Ethics in Business Environment Reseach scholars have defined business ethics in multidimensional manner in order to cover broad spectrum of the topic. Hooker and other reaseach scholars have pointed out following guidelines for business ethics. Companies need to design a fair and transparent fair incentive and remuneration system for top level management executives in order to draw a clear picture of the company in front of share holders. Companies need to emphasize on maintaining interst of shareholders because they are the key drivers to maintain sustainibility of any organization. Companies should implement transparent inter level business practices in order to refrain employees to commit fainancial fraud and perform in accordance with industry standards. Leading companies should not manipulate industry standards in order to create entry barrier for small firms. Companies should not involve in price discrimination because price discrimination not only perturbs industry equilibrium (read oligopolistic competition to monopolistic competition) but forces consumers to pay higher price for goods with respect actual market price. Theoratical Pespective Reseach scholars have pointed out that business ethics can be segregated into two parts such as Descriptive Business Ethics and Normative Business Ethics. Descriptive Business Ethics Descriptive business ethics deal with fair trade policy and its ethical implications. Morality of business practice is directed by ethical guideline of fair trade policy. Normative Business Ethics Normative business ethics provide guideline to restore equilbrium of business environment purturbed by unethical trade practices. This model is complemented with legal framework of the system, economic responsibility, moral values and political issues (Brenkert188). Impact of Business Ethics Business The study will discuss reasons behind failure of Nortel Networks Corporation on the ground of business ethics. Nortel Networks Corporation was a famous Canadian telecommunication company. They were using unfair trade practices such as bill-and-hold to show profitable financial result to investors for each quarter. In bill-and-hold model customers put order in present quarter but companies have the flexibility to deliver it in next quarter. Nortel recorded revenue of present quarter for future payments. They encouraged customers to use bill-and-hold transaction by offering them sales discounts and extended billing period. Nortel increased transient ownership from 2.5 percent to 12 percent during the time period of 1997 to 2000. They used street earning techniques complemented by exclusion of depreciation, extraordinary charges, charges from mergers to calculate EPS or earnings per share (EPS) and represent higher EPS value to disguise poor financial results (Fogarty, Magnan, Markarian and Bohdjalian, 2007). In this situation SEC or Securities and Exchange Commission has lodged financial fraud charges against Nortel and finally the Canadian telecommunication company ceased to continue operation from January, 2009. Nortel example is an indication for understanding importance of business ethics on sustainability of organization. Problem of Nortel can be resoluted by Kantian model of business ethics (Fernando 34-35). This model states that top level management should perform duty without protecting self interest and they should work for betterment of society. Social In 2011 Procter & Gamble has identified microbial contamination in Oral-B mouthwash products (350ml & 500ml) in China. The company identified that one percent of imported products from Columbia were contaminated by microbial infection but they did not have knowledge about exact batch numbers of infected products. In such situation Procter & Gamble announced completel product recall and refunded money to customers. This is an example of ethical trade practice and other companies should learn corrective ations of Procter & Gamble. Companies need to use business ethics to ensure betterment of society and should avoid unethical trade practices because it increases threat for social life of people. Economic In USA, Federal Government use import quota in order to increase trade benefit and decrease trade inequity created by different business agencies. USA Government uses import quota with an intention to save small players from market monopolization created by big players. Import quota of USA government can be understood from the view point of business ethics. Government thinks unprotected import can only benefit few international players but import quota can ensure betterment of larger section of business community. Business ethics in terms of import quota can be understood by using microeconomics models. (Source: Carbaugh 158-160) Suppose, S (US) and D (US) is longitudinal supply and demand of a particular product in USA. S (EU) defines supply magnitude from hypothetical country EU. Taking help of Nash equilibrium it can be said that price of the particular product will remain same in USA and EU (Nash 158-171). Import quota created by USA government will decrease supply to S (US+Q). This protection measure will increase production capacity of local players while total demand will decrease two fold. Consumer surplus will decrease upto significant level (area A+ area B+ area C+ area D). In the above mentioned diagram Area a notes redistributive effect (read equal distribution of income between consumer and producer); area B notes protective effect (read expansion potential for domestic small players), area C notes revenue effect (read revenue potential for USA government) and area D notes consumption effect (read decrease in toatal consumer demand). Government should put import quota in order to restrict monopolization of business and ensure keeping interst of not only small players and common people of USA. Companies need to follow the terms of import quota in order to fillip opportunity of business ethics. Legal Many companies counterfeit or imitate other company’s product offering without establishing any kind of strategic alliance with them. Such kind of counterfeiting is clear violation of business ethics. Many reputed companies also try their luck on counterfeiting by imitating features and applications of competitor’s offering with an intention to increase market penetration. Recently Apple has won a legal suit worth of $1.05 billion against competitor brand Samsung for infringement of software patent, design and application. Companies need to take strong action against counterfeits in order to fillip the scope of business ethics. Ethical Immoral Management Many organizations are complemented by immoral management style because they do business without maintaining coherence with business ethics and moral values of civic society. These organizations lack in leadership quality hence they need to create scope ethical leadership in order to achieve organizational sustainability. Amoral Management These organizations are worse example of violating norm of business ethics because they are completely ignorant about ethical perspective of business. These companies fail to achieve sustainable business structure hence whole operation ceased within few years (Ingram, LaForge, Avila, and Williams 218). Government should take stern steps against organizations working in amoral management pattern. Philanthropic Industry report suggests that business potential of various companies plays crucial role on driving the country into right direction. Companies planning to expand business in particular country need to contribute to overall growth of the country instead doing business to achieve personal prosperity. Business ethics can only create a guideline for companies but cannot compel any company to do business ethically. Conclusion The author of this essay has got knowledge not only about business ethics but other aspects of management as well. The author has grown as business professional after having completed the assignment and will use the following two learning outcomes from the assignment to solve future business problems: Applying Nash equilibrium in solving trade quota related issues Applying Kantian model of ethics in resolving problems regarding business ethics. Works Cited Brenkert, George. Corporate Integrity and Accountability. California: SAGE, 2004. Print. Carbaugh, Robert. International Economics. Stamford, Connecticut: Cengage Learning, 2010. Print. Fernando, Albert. Business Ethics: An Indian Perspective. Upper Saddle River, New Jersey: Pearson Education, 2009. Print. Ferrell, Conor, John Fraedrich, and William Ferrell. Business Ethics: Ethical Decision Making and Cases. Stamford, Connecticut: Cengage Learning, 2012. Print. Ingram, Thomas, Raymond LaForge, Ramon Avila, and Michael Williams. Sales Management: Analysis and Decision Making. Armonk: M.E. Sharpe, 2012. Print. Nash, John. Essays on Game Theory. Camberley: Edward Elgar Publishing, 1996. Print. Read More