BANKING ACADEMY, HANOI

BTEC HND IN BUSINESS (ACCOUNTING)

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EN:John

Unit 45: Business Ethics

Ethic Perspective of a Food and Beverage
business
1 of 2 (Individual Assignment)
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Business Ethics Assignment 1 Spring 2013-2014

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Unit Outcomes
Outcome

Evidence for the

criteria

Feedback

Assessors decision
First
attempt

Understand
different
ethical
perspectives
in business

explain the
background and
development of
theoretical ethical
approaches

1.1

compare and
contrast absolute
and relative ethics

1.2

explain the ethical

issues which can
affect the
operational
activities of a
business

1.3

explain how
business objectives
are affected by
ethical
considerations

2.1

evaluate the
implications for a
business and its
stakeholders to
operate ethically

2.2

Internal
Verification

Rework

LO1

Understand
business
objectives
from an
ethical
perspective
LO2

Merit grades awarded

M1

M2

M3

Distinction grades awarded

D1

D2

D3

Business Ethics Assignment 1 Spring 2013-2014

Outcome

Evidence for the

criteria

Feedback

Assessors decision
First
attempt

Internal
Verification

Rework

Assignment
( ) Well-structured; Reference is done properly / should be done (if any)
Overall, youve

Areas for improvement:

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DATE

DATE

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(Oral feedback was also provided)

STUDENT SIGNATURE
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FOR INTERNAL USE ONLY

VERIFIED
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NO
DATE

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VERIFIED BY : ...........................................................................
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Business Ethics Assignment 1 Spring 2013-2014

CONTENT
1.1 Explain the background and development of theoretical ethical approaches

1.2 Compare and contrast absolute and relative ethics

1.3 Explain the ethical issues which can affect the operational activities of a business

2.1 Explain how business objectives are affected by ethical considerations

2.2 Evaluate the implications for a business and its stakeholders to operate ethically

Business Ethics Assignment 1 Spring 2013-2014

Introduction
Most businesses today are concerned about the impact of their activities on the business
environment. Ethical concerns and greater consumer awareness have resulted in many
businesses promoting their social values to ensure competitive advantage. Business
ethics embraces corporate social responsibility and ethics relating to accounting
practices, marketing, human resource management, and production. In this unit learners
will examine the theoretical roots to the background and growth of business ethics. They
will look at the different types of ethical issues a business needs to consider and how the
development of ethical values impacts on business behaviour. It is important for learners
to appreciate how taking an ethical stance affects businesses both internally and
externally, including the effects on stakeholders. Learners will explore the social
implications of business ethics for a wide range of business activities that affect the
organisation itself and the external environment. This will include the ethical stance
behind topical issues such as whistle blowing, employment practices, advertising to
children, environmental awareness and using new technologies such as genetic
modification of food.
Learners will also examine how an individuals ethical stance impacts on the moral
relationship between employer and employee, as well as considering the contractual
responsibilities of both parties. This unit will give learners the opportunity to research
how a business responds to ethical concerns and assess the extent to which its activities
affect its behaviour, whilst ensuring business objectives are met. The aim of this unit is
to develop an understanding of the theory and practice of human resource management
focussing on current human resources practice and the impact of topical issues and
legislation.

Business Ethics Assignment 1 Spring 2013-2014

1.1Explain the background and development of theoretical ethical approaches

A business wants to base its ethical decisions on a systematic, rational, and widely
understandable argument so that they can be adequately defended, justified, and explained
to relevant stakeholders. This is where normative ethical theories come into play.
Ethical theories are the rules and principles that determine right and wrong for a given
situation.
There are two extreme positions towards ethical theory:

Ethical absolutism: There are eternal, universally applicable moral principles.

According to this view, right and wrong are objective qualities that can be rationally
determined.
Ethical relativism: Morality is context-dependent and subjective. Relativists believe
that there are no universal right and wrongs that can be rationally determined it
depends on the person taking the decision and the culture in which they are located.
Ethical relativism is different from descriptive relativism. The latter merely suggests
that different cultures have different ethics; the former proposes that both sets of
beliefs can be equally right. Ethical relativism then is still a normative theory.

Pluralism: a middle ground between absolutism and relativism.

Two important assumptions by Kaler (1999):

Morality is a social phenomenon. In order to make good business decisions, we need

to develop knowledge of the different moralities that we are likely to be faced with.
Morality is about harm and benefit.

Differences in Northern American and European views on business ethics:

Individual versus constitutional morality in North America, there is a more

individualistic perspective on morality, while in Europe there is a greater focus on
the economic system and the wider governing institutions.
Questioning versus accepting capitalism In the US, ethical problems are seen as
occurring within the capitalist system, which treats it as a given. In Europe, relevant
parts of business ethics focus on questioning the ethical justification of capitalism.
Justifying versus applying moral norms The challenge in Europe for business
ethics consists to a strong degree of the justification and ethical legitimation of
norms, resulting from a strong pluralism of moral convictions and values (e.g. in the
Netherlands, Germany and Sweden). In the US as far as the white, Christian
majority is concerned these values are not questioned but are fixed. They focus
more on the application of morality to business situations.

Business Ethics Assignment 1 Spring 2013-2014

Western modernist ethical theories

Absolute by nature they offer rules or principles to apply. They start with assumptions
about the nature of the world, and then more specific assumptions about the nature of human
beings. The main advantage is that they have a rather well-defined rule of decision, and
therefore provide us with a fairly unequivocal solution to ethical problems.
2 Groups:
Consequentialist (teleological) ethics: If the outcome of an action is desirable, then the
action itself is morally right; if the outcome of the action is not desirable, the action is
morally wrong.
Non-consequentialist (deontological) ethics: base moral judgement on the underlying
principles of the decision-makers motivation. An action is right or wrong because the
underlying principles are morally right/wrong, not because of its consequences.

Non-consequentialist ethics

Consequentialist ethics

Consequentialist ethics:

Egoism: Focus on maximization of individual desires and interests. A decision is

morally right when the decision-maker freely decides in order to pursue either their
short term desires or their long-term interests. Man has only limited insight into the
consequences of his actions. Egoism selfishness. Limitation: action of one has
direct consequences on others: market failure.
Utilitarianism: Focus on collective welfare, man avoids pain and looks to gain
pleasure (hedonist). An action is morally right if it results in the greatest amount of
good for the greatest amount of people affected by the action. Utility maximization,
takes shape in a cost-benefit analysis of some sorts. Act utilitarianism: looks at single
transactions and their results on the pleasure/pain balance. Rule utilitarianism: looks
at classes off action and asks whether underlying principles of an action produce
more pain or pleasure for society in the long run.

Non-consequentialist ethics

Business Ethics Assignment 1 Spring 2013-2014

Stem often from religious views, they ground ethical behavior in some eternally valid
principles, which are derived from a duty to others, or to a specific deity.

Ethics of duties: Developed by Kant. Morality is a question of certain eternal,

abstract and unchangeable principles that humans can apply to all ethical problems.
3 rules:
- Act only to that maxim by which you can at the same time will that it should
become a universal law
- Act so that you treat humanity, whether in your own person or in that of
another, always as an end and never as a means only
- Act only so that the will through its maxims could regards itself at the same
time as universally lawgiving
According to Kant, an action was only moral if it has passed the above three tests.
Great similarity with the Golden rule in almost all religions: treat others as you
wanted to be treated yourself. Problems: Over-optimistic, Complexity and
undervaluing outcomes (they are not taken into account, only the duties are.

Ethics of right and justice: Conceptualized by Locke, it claims that humans are
entitled to certain natural rights or moral claims, such as rights to life, freedom and
property, freedom of speech, conscience, consent, privacy and entitlement to a fair
legal process. These natural rights are a certain basic, important and unalienable
entitlements that should be respected and protected in every single action. These
rights are sometimes seen as related to duties, since the rights of one person can
impose duties on another. Examples:
- Declaration of the Rights of Man
- American Constitution
- United Nations Declarations of Human Rights
Limitation: the notions of rights are quite strongly located in a Western view of
morality.

Justice

Fair treatment of individuals in a given situation with a result that everyone gets what they
deserve. Two views:
-

Fair procedures
Fair outcomes

Distribution of wealth in an economical system

-

Egalitarian approach: justice is the same as equality, burdens and rewards should be
distributed equally and deviations from equality are unjust. Problem: does not take
into account differences between people, and offers no incentives for hard work and
innovation.

Business Ethics Assignment 1 Spring 2013-2014

Non-egalitarian approach: justice in economic systems is ultimately a product of the

fair process of free markets.

Solution lies in between. The Theory of justice by Rawls (1971) proposes 2 tests for
whether an action could be called just:
1. Each person is to have an equal right to the most extensive total system of basic
liberties compatible with a similar system of liberty for all.
2. Social and economic inequalities are to be arranged so that they are both:
(a) To the greatest benefit of the least advantaged; and
(b) Attached to offices and positions open to all under conditions of fair equality of
opportunity
Limits of Western modernist theories
-

Too abstract: too theoretical and philosophical, not practically applicable in

business
Too reductionist: theories focus on one aspect of morality (duties, consequences,
rights) when all matters at the same time
Too objective and elitist: only specialist ethicists and philosophers can pronounce
the right and wrongs of other people without any experience of the actual situation
they are faced with.
Too impersonal: do not take into account personal bonds and relationships
Too rational and codified: feelings and emotions are not taken into account
Too imperialist: why would Western theories be suitable for business people all
over the world?

Alternative approaches on ethical theory

-

Ethical approaches based on character and integrity: Virtue ethics contends that
morally correct actions are those undertaken by actors with virtuous characters.
Therefore, the formation of a virtuous character is the first step towards morally
correct behavior.
Ethical approaches based on relationships and responsibility: Feminist ethics starts
from the assumption that men and women have fairly different attitudes towards
organizing social life, with significant impact on the way ethical conflicts are
handled. Feminist ethics is an approach that prioritizes empathy, harmonious and
healthy social relationships, care for one another, and avoidance of harm above
abstract principles. Focus on Relationships, Responsibility and Experience.
Ethical approaches based on procedures of norm generation: Discourse ethics aims
to solve ethical conflicts by providing a process of norm generation (on the spot,
democratic agreement) through rational reflection on the real life experience of all
relevant participants.
Ethical approaches based on empathy and moral impulse: Postmodern business
ethics. Modern theories such as capitalism, communism, socialism etc. are too
ambitious, reductionist, optimistic and can therefore not explain the complex reality
of human existence. Postmodern business ethics is an approach that locates

Business Ethics Assignment 1 Spring 2013-2014

morality beyond the sphere of rationality in an emotional moral impulse towards

others. It encourages individual actors to question everyday practices and rules, and
to listen to and follow their emotions, inner convictions, and gut feelings about
what they think is right and wrong in a particular situation. Therefore, it does not
provide us with rules, principles or recipes for ethical decision-making.
Characteristics
o Holistic approach
o Examples rather than principles
o Think local, act local
o Preliminary character
o
1.2 Compare and contrast absolute and relative ethics
There are two types of morality, absolute morality and relative morality.
An absolutist believes that certain things are always right or wrong no
matter the consequences or situation, while a relativist is more
concerned with outcomes and believes something is either right or wrong
based in certain circumstances or situations.
An absolute command is a command that is true all the time, in all places
and all situations. An absolutist thinks about what is the right thing of
itself, for example murder, because killing someone regardless of the
consequences of an action or the results might occur. this means they
approach is deontological. The system is simple and easy to apply, as a
crime will be a crime regardless of the circumstances. An example is
stealing, stealing is always wrong no matter the culture of the person,
what the reasons were or when it happened make no difference; stealing
is universally wrong and everybody knows that.
There are many strengths to absolutism. Firstly, because certain things
are neither judged right or wrong in all situations, it makes it easier to
apply than relativism. for example, in absolutism, if someone was to
steal, it would be seen as wrong, while in relativism if someone steals, it
might be, because they cannot afford food for their baby, so all other
circumstances need to be taken into account. Also, it enables us to have
a UN Declaration of human rights, as it provides a universal code to
measure everything against.
However, there are many weakness to absolutism as ethics are
deontological which means that it pays no regard to the outcome or
consequences of an action, so for example, if a poor mother stole food to
feed her hungry child, this act would be judged wrong, because absolute
ethics believe a crime is a crime, even though surely the stealing is for
outcome and her child's life is more important. Also no one can really
know what absolute morals are since all sources of morality are open up
to people's opinions and own interpretation.

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However relative morality judge things relative to the situation. it means

there are no universally moral principles and there is no objective truth
and if there is it cannot be found. There are many advantages to
relativist, such as it is flexible and takes everyone's opinion into account,
as it is based on peoples' point of view, so no one is wrong and it also
takes certain circumstances into account. For example a relativist may
believe abortion is wrong, but if a poor mother with hardly any money is
pregnant they might allow abortion then, because it avoids the mother
bringing a child into the world and giving it a bad life, so with relativism
they are more concerned with the outcome.
However, there are a number disadvantages to relativism, such as it is
very difficult to apply, as judgements are always subjective and based
and influenced by peoples' thoughts, feeling and opinions, so everyone's
ideas of what is right and wrong will be different. Relativism is a lot more
difficult to apply than absolutism. Also some acts have always wrong like
genocide, so relativism doesn't allow moral progress.
In conclusion, absolute ethics and relativist ethics ways of judgement are
both very different, both having lots of disadvantages and advantages.
however in my opinion relativist judgements are better, because they
take certain situations into account and acts like abortion cannot be
wrong.
1.3 Explain the ethical issues which can affect the operational activities of a business
In order to achieve this outcome, based on the list of 10 companies given in scenario, Nestl
SA has been choosen to be objective to analyze.
Then, based on the data about operational activities of Nestl SA, three following ethical
issues have been choosen to describe how they affect operational activities of Nestl SA:
corporate social responsibility, fair trade and child labour.
Corporate social responsibility
Definition
Corporate social responsibility is the corporate initiative to assess and take responsibility
for the company's effects on the environment and impact on social welfare. The term
generally applies to company efforts that go beyond what may be required by regulators or
environmental protection groups.
Explain
According to website, in order to have high quality raw material source to serve coffee
production operation, a coffee company needs to have big area of agricultural land enough
for planting coffee trees. Nestle SA is not exception, and this requires destroying the forest
and this action can cause big effect to the environment, especially this will accelerate the
rate of increase of C02 in atmosphere. And, process of handing and producing coffee also
emissions waste to the environment, for example, coffee husk, water waste, chemistry.
The effect of this ethical issue for Nestle SA is that, this will worsening firms corporate
image in sight of customer and community, therefore firms volume sale will decrease.

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So, in order to complete firms corporate social responsibility, Nestle SA had many
significant efforts. For example, Nestle SA use high technology to reduce to lowest level of
waste that emissions in production process. And firm also seek to improve quality and
productivity of coffee tree to reduce planting area while increasing output volume.
Child labour
Definition
Child labour refers to any work performed by children under the age of 12, non-light work
done by children aged 1214, and hazardous work done by children aged 1517 and refers
to the employment of children in any work that deprives children of their childhood,
interferes with their ability to attend regular school, and that is mentally, physically,
socially or morally dangerous and harmful
Explain
In actually, use of child labour is the action which is forbidden in legislation of almost all
countries in the world. This action is seem to be an immoral action because it not only cause
significant damage for children in both physical and spiritual side but only cause remarkable
damage to corporate image of firm which use child labor in sight of customer and whole
community. Furthermore, the firm may also face with punishment from government where
that firm operates.
Nestle SA had many right policies in their operation activities to follow the law of using
labor in countries where firm operate. For example, Nestle SA is very strict in hiring
employees, all employees who work in all factories of firm are over 18 year old and meet all
requirement from firm.
Fair trade
Definition
Fair Trade is a trading partnership, based on dialogue, transparency and respect, that
seeks greater equity in international trade. It contributes to sustainable development by
offering better trading conditions to, and securing the rights of, marginalized producers and
workers.
Explain
For a coffee production company as Nestle SA, fair trading play an important role in
maintaining firms prestige and corporate image for its partnerships. If Nestle SA does this
job well, firm will be able to keep partnerships loyalty and continue to operate advantage in
future. In contrast, firm will face many disadvantages in future.
In order to keep ethic in trading, Nestle SA had many right policies in their operation. For
example, for the farmers who plant coffee trees to be raw material source for firms
production operation, Nestle SA still buy raw material with previous contracted price
despite coffee productivity increase significant in that time. Furthermore, firm also ensure to
implement all terms in the contract with its partnerships, for example, distribution
companies, advertisment companies, etc.
2.1 Explain how business objectives are affected by ethical considerations
According to Nestle SA homepage, firm has mentioned some specific objectives for coming
years. Here we choose three specific objectives of firm to analyze how they are affected by

Business Ethics Assignment 1 Spring 2013-2014

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ethical considerations. Three ethical considerations have been choosen are human right,
legal and regulatory compliance, corruption.
First objective
First objective of Nestle SA is that, firm want to expand their operation and increase their
volume sale.
Explain
High quality human resource is a very important factor which help firms achieve best result
in business. One important measure for firms to have high quality human resource is to
ensure and protect human right of its employees. Human right here means that firms have to
provide best working condition for its employees. This is also correct for Nestle SA.
Protecting human right will motivate all employees of firm to try their best in working
therefore working productivity and effective and effec will increase and firm will be able to
increase volume sale and expand their operation. In contrast, if firm does not protect human
right for its employees, they will not try their best in working therefore business effect will
decrease. In order to achieve this objective, Nestle SA has performed some actions as paying
fully salary to employees, giving them best environment to work, and also give them many
meals collective.
Second objective
Second objective of Nestle SA is that, firm want to build mutual trust with consumers,
governmental authorities and business partners.
Explain
For any company which operates in any industry, complying legal and regulatories of
government in business is very important. Nestle SA is not exeption. Complying legal and
regulatories in business help firm protect its rights as well as rights of partners, consumers
and goverments, so it will create trust of them for firm. This will help firm maintain
prestige, trust and corporate image in sight of partnerships, consumers and community. Firm
will not only be able to sustain advantage condition in all business and investment operation
but also achieve more opportunities from the trust of partner, consumer and government. In
contrast, the rights of them are not protected and firm will lose trust of partner, consumers
and government and face many risks which can happen from breaking business legal and
regulatory. So, in order to complete this objective, Nestle SA has some right actions, for
example, paying tax fully, ensuring to perform all term in contract between firm and its
partner, selling high quality goods to consumer.
Third objective
Third objective of Nestle SA is that, firm want to increase effect of using capital for firms
invesment and business activities.
Explain
For Nestle SA firm, managing and using capital effectively is very important to be able to
control all firms business operation and investment activities. One serious problem which
affect very significant to capital management and cause huge loss of capital is corruption.
Corruption not only cause damage of capital and led firm to bankruptcy but also cause loss
of trust of subordinate for their leaders. So, in order to achieve this objective, Nestle SA has

Business Ethics Assignment 1 Spring 2013-2014

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performed some specific measure to prevent corruption. For example, companies has
published all of the activities of enterprise apparatus with transparency, build, improve and
ensure strict implementation of the regime, the standard norms, rules of conduct for civil
servants, rules of professional ethics, switch positions of officials and servants, transparency
property of civil servants, clarify responsibilities of heads of agencies, organizations and
units for corruption, reform administrative, innovate technological management and
payment methods.
2.2 Evaluate the implications for a business and its stakeholders to operate ethically
For Nestle SA, the firm has two main groups of stakeholder which their interest is affected
directly by firms operation in order to make profit. The first group includes shareholder,
bank and government. Shareholders interest is they want firm to pay dividend, if firm make
more profit then shareholder will receive more dividend. Banks interest is that thay want
firm to pay interest of loan that firm has borrows from them. If firm make profit, then firm
will have money to pay to bank. Governments interest is that they want firm to pay tax for
profit firm made. If firm make more profit then government will collect more tax. The
second group includes enviromental organization and pressure group. Their interest is they
want firm to protect environment and limit to the lowest level of damage to environment
caused by firms activity. Therefore, it can be seen that, there is a conflict of interest
between these two groups. If firm make more profit then interest of first group will be
satisfied but it will cause more damage for environment then interest of second group will
not be satisfied. In contrast, if firm make less profit then interest of first group will not be
satisfied, but it cause less damage to environment that mean interest of second group will be
satisfied. In order to deal with this dilemma, Nestle SA has used some specific measure.
Firstly, instead of deforestation, firm tries to renovate and use dry lands which have not been
used for any purpose yet to plant coffee tree. Firm also use high technology in production
process to reduce waste and improve quality of product and increase volume output.
Therefore, firm will be able to meet interest of both stakeholder group.

Business Ethics Assignment 1 Spring 2013-2014

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Conclusion
Through this assignment, I have provided to readers basic approaches to ethic and how
ehtical issues affect businesss operation. I hope businesses can have essential knowledge to
make ethical decision.

Business Ethics Assignment 1 Spring 2013-2014

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