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Q1.Both legally and ethically managers have duties of service, obedience & loyalty to their employer.

require them to obey lawful & ethical orders to exercise reasonable care in the performance of duties to put
the employer’s interest ahead- justify the statement for alcohol industry with appropriate theories/models
that you have learned.

Ans: Managers indeed have considerable amount of legal and ethical duties towards their employers. According
to Milton Freidman’s arguments managers are agents of their employers and their responsibilities are to maximize
the employer’s profits. Managers are hired as representatives of the employers and they run the organization on
their behalf. The managers are obligated to work for the wellbeing of their employers and ensure that their
business objectives are met.
According to Freidman should devote organizational resources to pursue increased profits so long as it stays
within the rules of the game and engages in free competition, without deception and fraud. This means that
managers are free to do whatever it takes to maximize returns for the owners while abiding by the rules and
regulations set by the government.
This theory also applies to managers in the alcohol industry as well. Now the alcohol industry is one of the many
industries that are frequently faced with questions of legal and ethical issues. There has been significant amount
of argument regarding rules, law and voluntary codes of practice in the industry. Managers need to acknowledge
that the alcohol industry is a very volatile industry. Minor issues can change into industry altering phenomenon.
Managers are required to be very careful in their decision making and resource utilization so that their activities
are not questioned.
Any unlawful or unethical act from the manger directly affects that employer’s image and puts the entire business
at risk. Referring back to Freidman’s argument managers must take care of the employer’s image and business
reputation as any hamper to these could hurt the company’s profitability. And since managers are obligated to
stay legal according to the theory, they must run the business accordingly.
The alcohol industry has always been questioned regarding the negative impact it has on society. Under aged
drinking, side effects of drinking, damages to the human body from alcohol consumption, etc. are some of the
usual critics that companies in this industry face. Society expects more social responsiveness from this industry.
However trying to do additional activities for benefitting society would not be the best use of the company’s
resources and neither would it bring in more profits for the employers. On the other hand not doing so would
come back to haunt the managers in terms of pressures from the government and society. Thus managers need to
bring the operations of companies in harmony with the expectations of the society.
Managers need to carry out their activities so that they are able to fulfill their obligations to the employers and the
expectations of the society. Managers can refer to the stakeholder alternative model for this purpose. The model
states that businesses should consider all those who are affected by its operations before making any decisions.
Organizations should look to benefits everyone who may be involved with the company. Furthermore the theory

suggests that it is possible to be both profitable and look after the stakeholders at the same time using this model,
although profits are believed to pour in in the long term of the business thus allowing the organization to operate
in a healthy manner. The core concept of the stakeholder model is to give organizations a means to engage in
sustainable development where they enjoy growth in the present without exhausting scope for the future. This is
essential for the alcohol industry where there are constant pressures regarding business practices. Sustainable
development is the key for organizations to survive and for manager to be lawful and ethical in their actions while
keeping the employers interest ahead.

Q2. If you want to start up a business in a tobacco manufacturing industry explain the theory/theories that
you would adopt to demonstrate ethical quality of your decision. How would you formulate the CSR of
your company? You need to justify your cost associated to it.

Ans: Tobacco industry itself is a very hostile industry. Critics are never bored of pointing fingers at the mistakes
and affects that this industry has on both human beings and the environment. Operating in this industry is very
complex and owners and managers need to pay close attention to not only their business model but also on the
society. It is crucial for tobacco manufacturers to demonstrate ethical behavior in their business activities to be
able to operate profitably.
Following Carr and Freidman’s theories are not advised in this industry as the context of the industry is very
different. Stakeholders expect companies to be ethical in their activities take responsibilities of giving back to the
society. Therefore organizations must adopt policies that enable them to take responsibility and ethical decisions
in a manner that produces a win-win situation for all.
A wise ethical theory to adopt while operating in the tobacco industry would be the utilitarianism theory. This
theory states that an action is right if it produces greatest amount of benefit for the greatest amount of people.
Adopting this theory would enable the company to consider actions that will bring good for the maximum number
of people.
For a tobacco manufacturing organization it is vital that the organization is ensuring that they are benefitting a
majority of people. Although using this theory it is possible that sometimes while maximum number of people are
benefitting, people are also being affected negatively. For example for the tobacco industry, producing cigarettes
and other tobacco products can be harmful to human beings, but if organizations are able to generate large
employments, pay appropriate taxes and engage in CSR activities then the society at large is benefiting the most.
Thus by using the utilitarianism theory organizations are able to rationalize their operations as being beneficial to
the maximum number of people. Now the question remains on maintaining the utilitarianism approach to decision
making and the answer for it is rule utilitarianism.
Rule utilitarianism proposes that behavior is evaluated by rules that if universally followed, would lead to the
greatest good for the greatest number of people. Rules should be designed to incorporate the organizations
objectives and purposes, profit maximization and social responsibilities. The rules should act as guidelines for
decision making and should be enforceable on everyone in the organization. All decisions should be based on
what these rules say. All organizational activities should compliment these rules. Managers must ensure that all
decisions made are in harmony with these rules and does not violate any of the principles that defines that rules.
And when followed properly, ethical decision making in the tobacco manufacturing industry becomes very much
possible and the maximum number of people are benefitted.
CSR for tobacco manufacturing industry today have become more of a required activity rather than an expected
one. This is due to the negative perception developed for the tobacco industry due to years of questioning their
products and its outcomes. Companies in the industry use CSR to give back to society and to make up for the
damages it causes.
When formulating CSR, the first area to observe is the organization itself and its employees. It is highly crucial
that the employees working are motivated to work for the organization and give their best effort for its wellbeing.
Being responsible towards employees always lead to positive returns in term of better performance, loyalty,
obedience and service. Therefore internal CSR would include:
• Annual paid holidays and leaves.
• Employee recognition ceremonies.
• Company sponsored sporting events.
After employees comes the customer. Keeping customers happy and content can lead to more than just increased
profits. It leads to goodwill and image building, customer loyalty and sustainable development. Therefore CSR
directed towards the customers cannot be undermined.
CSR aimed at the customers include:
• Larger caution labels on cigarette packets.
• Sponsoring social and charity events.
• Aid in community development.

Q3: If you were a production manager of tobacco manufacturing firm what actions would you take to
improve ethical decision making-explain.

Ans: As a production manager for a tobacco manufacturing company my task is to make sure that products are
made according to government rules and regulations, no harmful chemicals are added, proper content is used and
company resources are properly utilized. The task is very crucial as any deviations may lead to serious
consequences for the company. For example if the tobacco content is increased in the cigarette sticks that lead to
intoxication it would be a violation for the rules set for the industry. As a result the owners would have to pay
massive fines which would be followed by damaged image in minds of the customers and employees.
So the urgency of the production manager being ethical is very crucial. And thus in order to demonstrate ethical
behavior I would propose using the justice model and NORM for ethical decision making. Developing a NORM
would allow employees and managers to refer something when in a dilemma. The NORM would state out what
actions are acceptable by everyone in the company and that everyone is mandated to display such actions. For
example the NORM would state out that no one should contaminate the recipe of cigarettes even if it might
increase sales.
The justice model would act as a supporting theory for the NORM. It would help in the development of the
NORM. The NORM should be made in such a manner that it does not violate anyone’s fundamental rights while
also stating out acceptable behavior that would enable the organization to operate ethically and profitably. A key
point in making NORMs is to make sure there is considerable amount of transparency that allows employees to
know about the NORMs and agree to them freely.

Q4: To what extent does an employee working for a firm retain a zone of personal privacy not subject to
invasion by the firm because of business necessitates- explain using NORM as ethical rule.

Ans: When working for an organization an employee working for a firm may experience somewhat limited
personal privacy. When working for an organization employees may be faced with emergency situations that
requires others to trespass into their personal zone for sorely business necessities. However the violating ones
personal privacy is not always justified as business necessity.
Organizations can lay out scenarios and situations that are considered as emergencies and then design NORMs
that all the employees freely agree to abide. The NORMs would permit personal privacy invasion only on those
circumstances. For example if an employee is on leave and a document is urgently needed from his computer in
his office. The organization can design it NORM that would make it right for someone else to go into his office,
turn on his computer and retrieve the document. Now in this case two issues are to be looked at very carefully
when NORMs are being made.
First is what is considered as an emergency that requires breach of personal privacy. The motives of the breach of
private zone should be valid. Organizations should clearly state out what is considered as emergency in the
workplace and under what circumstances the organization can invade ones personal zone. Pointing out emergency
situations are half the task. Everyone in the organization needs to acknowledge the situation as serious and
important enough to allow others to invade their privacy. Their acknowledgment needs to come from free
consent. The organization should also demonstrate considerable amount of transparency in formulating the

emergency situation action plans so that employees are aware of the NORMs of the organization and freely agree
to those.
Secondly it is very important that when someone’s privacy is being breached care must be taken to ensure no
other information or items are being looked into besides the ones that are needed for the emergency situation. For
example when retrieving the important document, care must be taken to make sure that only the particular
document of interest in retrieved and nothing else. Other files and documents that are not related to the situation
should not be tampered with. Organization should place attention on this issue so that one’s personal information
is not leaked for the sake of an emergency. It is the responsibility of the organization to protect the employee’s
personal privacy zone and personal information.
Hence NORMs should be made to allow organizations to invade personal privacy zone during emergency
situations keeping in mind not to tamper with any other information that is not related to the situation at hand.
Therefore employees can get a degree of privacy while working for an organization and in case of any breach they
would be aware of it and fully agree to it.

Q5: Where customers and clients are concerned: Trust is at the heart of this stakeholder relationship- do
you support the statement? Explain using Deontology as ethical rule.

Ans: For any relationship to be healthy and prosperous trust has to be displayed from all the parties involved.
Trust builds the foundation of the entire relation and allows it to grow. For businesses trust is the key for
sustainable growth. Organizations need to earn the trust of the customers and vice versa. Without trust neither will
the organization use its resources properly to generate benefit for the customer nor will the customers have faith
in the organization and would be reluctant to use their money to purchase benefit from them.
When a customer trusts an organization it a sense of safety is formed in the mind of the customer. He would not
be reluctant to listen or try out what the organization has to offer knowing that the organization is working for the
best interest of the customer. Organizations also need to recognize this and make sure that they maintain this trust
customers have on them. They should keep work best to keep operations transparent and clear to that all their
activities are visible and no doubt is built in the minds of the customers.
Now when it comes to ethical theories deontology supports the concept of trust a lot. Deontology states that
ethics is based on the notion that people have the duty to always obey moral rules, regardless of any positive
outcomes that can come from breaking them. Deontology proposes people are free to choose to accept certain
constraints and decide what is right by looking at the nature of the act itself. Some establish specific rules - keep
your promises, do not kill etc. - and some follow Kant's categorical imperatives or God's commandments. They do
not examine consequences as a rule and they sometimes find themselves in very difficult situations.
In short deontology says that even if doing something may lead to negative outcomes one should not break the
moral codes and rules that they follow. Now two rules of deontology include “do not deceive” and “keep your
promise”. These are rules are generic to all business and are what helps to build trust. For example suppose a
securities company that deal with share market follows deontology. Now the company finds out that a customer’s
investment in shares was not profitable. Now as per deontology the company should inform the customer about
the loss rather than try to hide the fact and try to move the investment somewhere else to recover.
Now even though hiding the fact and moving the investment might bring profits for the customer, it would break
the moral rules by which the company operates. It would be deceiving if they did not inform the customer. And
should the customer find the fact out from some other sources he would perceive and being deceived by the
company. And thus would lose all trust on the company and eventually would stop doing business with the
On the other hand if the organization did reveal the fact to the customer, then a more healthy relation could be
formed. The customer would know that the company is not hiding anything from him and is also a very ethical
company. The customer would feel he is transacting with an ethical company and thus the level of trust for the
company would increase thus benefitting all the parties.

Q6: It is difficult to monitor and control the behavior of managers and employees when a firm’s divisions
and branches are separated by oceans or continents- explain using Ethical Relativism as ethical rule.

Ans: Organization with overseas operations always faces the problems of controlling and monitoring their
employees. Although technology has made communication better and fast constraints still remains. The cultural
differences, time zone differences and work practice differences all come into play when dealing with overseas
The above mentioned differences can all be categorized under relativism. The theory says that right and wrong
are function of the moral teachings of each particular society. An act is right when it is approved by the social
group to which one belongs. This philosophy allows people to mutate ethically as the culture, knowledge, and
technology change in society. Conventional ethical relativism supports the view that the truth of moral principles
is relative to cultures. The culture or society becomes the highest authority about what is right for each individual
within that society. The same action may be morally right in one society but be morally wrong in another. If
ethical relativism is correct, there can be no common framework for resolving moral disputes or for reaching
agreement on ethical matters among members of different societies.
On the other hand there may be the case that some moral beliefs are culturally relative whereas others are not.
Certain practices, such as customs regarding dress and decency, may depend on local custom whereas other
practices, such as slavery, torture, or political repression, may be governed by universal moral standards and
judged wrong despite the many other differences that exist among cultures. Simply because some practices are
relative does not mean that all practices are relative.
Now when ethical relativism is related to overseas employees it provides a broader view of the difficulties in
controlling and managing employees. In case of overseas employees, everyone comes from different cultures,
race, religion, society and background. They all received different moral teachings and have different beliefs.
Some of their cultural values and teachings might not match with those of the organizations. Some might even
contradict. It is in these instances that problems arise.
The organization might expect something from it employees but the employees may do something completely
different. For example an organization might expect all its employees to show up at work right on 9am in the
morning. But employees in overseas location may come from societies where people are very lazy and takes time
to do everything. For them showing up on work right at 9 am might be quite difficult as it is in direct
contradiction with their cultural teaching.
Another example may include an organization that promotes workforce diversity in terms of gender. However the
location where the organization is located may have a very male dominated society. Therefore the male
employees may have difficulty working with female employees who are considered as their equals.
Now in both instances the employees are correct according to the moral teaching they received from their culture
while the organization is also correct on having its own culture and values based on international standards. And it
is in this situation where the problems arise. Employees are confused and cannot abide by the organizations laws
and frequently relate back to their own cultural teachings leading to poor performance. The organization is also
faced with the problem on bringing employees cultural beliefs into synchronization with its own making the entire
process of controlling and monitoring very difficult.

Q7: Analyze the given experiences using ethical theories.

Ans: The case presented has numerous areas where ethical theories can be implied and where ethical obligations
and responsibilities have been violated. The first issue to look into is the long working hours. Employees are
being made to work for hours that are long past there official working hours. When employees joined the
organization they signed in knowing the job would be from 9am to 5pm. But clearly that is not the case. And
when trying to protest employees were called unprofessional.
Now if the situation is looked from Friedman’s theory that states that managers are agents of the owners and are
obligated to maximize the employer’s benefits. So if working for extended hours can lead to profit maximizations
then the theory stands and the act is justified. But on the other hand managers and employees are faced with the
problem of role conflict. Employees also have families and social lives and those also need to be looked into.
People cannot simply remove everything else and solely work for the organization. Making employees work
several hours with disregard for their work-life balance is irrational and unethical from the organizations side. The
organization need to acknowledge the fact that the managers have other obligations and responsibilities as well
over which the company has no authority and should not deprive the employees of other social duties that they
may have.
Furthermore Friedman’s theory states that the only responsibility for businesses is to make profits while staying
within and law and regulation imposed on them. The organization however is not abiding by the law which
prohibits organizations to make their employees work for several extended hours. So it is not only being ethically
responsible the organization is also breaking the law.
And lastly the other branches of the organization are all abiding by the law and making the employees work
exactly the amount of time that was mentioned to them when they were hired. The employees of the Indian office
are the ones who are being discriminated and made to work extra hours. The Indian office is failing in its
corporate social responsibility of being legal and non-discriminatory and violating the NORMs that were
established by the parent company.
In case of the situation given it is recommended that the MCN should adopt the stakeholder model for running it
business. The model presents the idea of running operations by keeping the best interest of all the stakeholders of
the company. The employees are one of the key stakeholders of any organization. Therefore they need to be taken
care of.
The company should look into the requirements of its employees and agree to the fact that employee’s lives are
not completely bound to the organization. They have social lives and other responsibilities that they need to
fulfill. So organizations should design their work, work hours, employee responsibilities and company culture and
values based on this understanding. That way employees can work with a free conscience knowing that they have
a good work-life balance. Thus they can focus on their tasks better and be productive.
Actions taken after incorporating the employees needs and requirements would produce the best outcomes as
employees would give in better effort leading to better employee performance which will eventually lead to better
organizational performance.


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