Effect of Ethics on Business and Stakeholders

Business ethics are the basically principles and underline what are the right and wrong things to do as a business. A business being ethical covers the environment, sustainability and human rights. Overall, it is what is morally correct. Business moral values are the practices performed in an organisation and if they are good or bad morally.

Ethical Concerns of Tesco

Tescos main goal is to have an unbeatable to their customers and aim to get and retain customers as a result o being cheap compared to their rivals. As a result of having the cheapest prices it is causing many farmers in the UK (which supply all sorts of things ranging from eggs to potatoes) to go bankrupt as they cant live well off of the money Tesco is giving them for supplying stock. The lack of care for their suppliers shows that Tesco are not ethically correct and are morally wrong for not treating them well.

At the same time however, Tesco are getting large profits due to this and many customers will choose Tesco over another supermarket due to them having the cheaper prices. This shows that the customers are the priority over the farmers as they are getting the good prices and deals whereas the farmers are getting very little money for the stock, they give to tesco.

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Palm Oil Ethical Problems

In recent years Palm oil has been used more and more in everyday products due to its cheap price. One of the companies that use palm oil in their products is the Chocolate company Galaxy. Palm oil is causing environmental damage as it is deserting forests and wildlife habitats as a result of the large demand. Tesco again, take advantage of the cheap price of palm oil and include it in their Tesco Value biscuits among other products.

Palm oil is cheap mainly due to the fact it is basically a two for one deal when purchasing the product as like a plum the fleshy part as ell as the stone can be grinded into oil which is why there is a larger demand for it. The demand is very harmful to the environment as forests are being destroyed and is affecting wildlife as a result. Tesco should consider using a more ethically acceptable alternative to this as they (among others) are destroying the environment and should make a decision to change the oil they use as even though it may be more expensive it is more beneficial to the environment.

Most of the time ethically bad decisions are made when the company is trying to make money ir save money. There is obviously benefits of using unethical products for the company as they can make a large profit however, the negatives can mean you will lose customers due to this wrong behaviour as some customers will not want to contribute to this wrong doing. As well as this if Tesco was to use ethical products and be honest and pay their workers well many new customers would arrive as they would be seen as a trustworthy company. In order for them to work ethically they have to see what areas they are doing bad in and see how they can fix

Implications for the Business & Stakeholders of a Business Operating Ethically

Stakeholders are a person, group or organisation that has interest or concern in an organisation. Stakeholders can affect or be affected by the organisation’s actions, objectives and policies.

The Business I will be using will be RyanAir.

RyanAir stakeholders in conflict:

• Employers
• Managers
• Customers
• Suppliers
• Citizens
• shareholders

Conflicts Between Ryanair Stakeholders

• Employees Vs Owners

Employees generally want high wages whereas owners seek high profits and are reluctant to pay staff/employees high wages. An example of this would be here where they need to pay for their own training and uniform. ‘Staff are also expected to pay for their own uniforms, crew meals and training courses.’

• Customers Vs Shareholders

Customers naturally want low prices, but shareholders generally want higher prices in order to generate higher profits.

An example of this would be that customers don’t want hidden charges that increase the overall price.

• Employees Vs Management

Employees seeking high wages might conflict with management’s desire to cut costs to boost profit in order to satisfy their own needs as well as different stakeholders. The example for this would be the same as the one above for the Employees Vs Owners conflict as the owners influence the Management.

Ryanair is a business that is acting unethically in many ways. They are unethical in all ways ranging from environmental problems to how they treat their staff.

RyanAir have recently gotten into the newspapers as their founder Michael O’Leary was discovered to be giving himself a 100-million-pound bonus at the end of the year. This is shocking as Crewlink who is partnered with RyanAir was not paying a former employee called Sophie Growcoot and forced her into taking 3 months of work off unpaid. The contract that was signed also restricted Sophie from gaining any employment as she was still under contract with RyanAir.

It was then later discovered that she was only paid for the time she spent in the air and would not count the turnaround time after flights, meetings and pre-flight briefings. There are many more things that went on including the fact she had to pay for her own training and uniform. Overall, this proves that as a company RyanAir is very unethical due to this as they have clearly taken advantage over their employee and have treated them very wrongly. RyanAir is a huge company also so they knew what they were doing.

Health and Safety

The action in which Ryanair is carrying out which leads me to believe that they are an unethical business is that they are putting their passengers and staff at risk by restricting the amount of fuel they carry in an attempt to cut costs. In a recent article published by The Independent, the airline has been accused of not putting extra fuel into their tasks, which would be used due to any delays.

The article includes an example of this which has recently happened, a Ryanair flight has to make to attempts to land then make a pit stop as they had not filled the tank fully included extra fuel in which they needed. However, this is not a legal problem as they fill the tank to the amount by law. They have the amount issues by law, but are driving slower in order to use up less this means they are adding time on to journeys.

With these issues and more creating black clouds over the business which is making them act unethically, Ryanair needs to consider ways in which they could deal with the occurring issues if of course they can actually deal with them.

The fact is that Ryanair is faced with unethical issues including, environmental, social and safety ones. In order to start acting more ethically the airline seriously needs to overcome the occurring problems, for the three issues I have explained above I am going to suggest ways in which they can change unethical to ethical.

Environmental

RyanAirs main ethical issue would be how they treat the environment. The emissions for the aircrafts are the biggest problem. RyanAir could change this if they wanted to. They would have to change their aircrafts and types of fuel as a result. Virgin Airlines is now known as an eco friendly airline as they have changed their ways. RyanAir is very unlikely to make the change as they are known as a budget airline and their only goal is to make money.

Social

Socially, RyanAir are unethical as I have previously explained in the Sophie Growcoot case they have clearly took advantage of her in multiple ways and have made themselves look very bad as a result. RyanAir are hiding behind the fact that it is Crewlinks responsibility that these bad things have occurred. RyanAir simply cannot deny that they had no idea this was happening as they would be obviously heavily involved alongside Crewlink in the process of dealing with employees.

the most practical thing to do in this situation is to drop Crewlink all together and start employing people straight through Ryanair that way if anything does happen Ryanair will have no excuses and will have to take the responsibility themselves

Safety

Recently RyanAir are reducing the amount of fuel put into a plane on a journey to the legal minimum in order to cut costs on fuel. Due to this, they would have no emergency fuel which in a bad case will be extremely dangerous to everyone aboard. Even though the chances of needing the emergency fuel is low it is still something that should be valued heavily just in case as it risks the safety of everyone aboard.

Impact of a Business’s Ethical Behaviour on Stakeholder and the Business

Even though being an ethical company is a good thing and reflects on the company itself it isn’t always the most cost-efficient way to run a business as materials can be more expensive the more ethical they are. Ryanair is a very unethical company and have been for a logn time. They are mostly known for their extremely cheap flights. Ryanair is unethical due to this as even though there is not a price that would save the environment, they are doing these extremely cheap flights to make a small profit.

Even though acting ethically is a good thing, Ryanair have been unethical for a long time and with the change there is bound to be some impact on the business and its stakeholders. If the business was to carry out the solutions, I have suggested they will encounter long-term and short-term advantages and disadvantages. In making the ethical decision to stop reducing fuel in order to cut costs would mean that the business would need to invest more money therefore in the short-term no one would be the winners as the shareholders might not get as much money back as they invested. However, in the long-term, as by carrying out these particular solution customers may view Ryanair as safer and trust worthier, the business profits may increase therefore the Ryanair will be a good investment once more.

If the business were to cut off Crewlink and have an in-house recruitment, Ryanair may save money, as they would no longer need to pay Crewlink for their services. This would be an advantage for the business for two reasons, they would be able to control everything and stay out of trouble caused by linked companies and they would cut costs in a safer way.

For the last solution it is a win/win situation for all involved, the business and stakeholders. By being more environmentally friendly Ryanair will attract more customers as they will still be able to keep their low-cost scheduled flights just in an ego way. In my judgment I think Ryanair would be crazy not to carry out these changes, they will be beneficial to everyone in many ways. As a business Ryanair will be able to maintain its low-cost reputation but just do it will more certainty, yes in the short-term it may be a lose but it will be a win for all in the long-term.

Social Implications of Business Ethics

Here I will be describing the social implications of business ethics facing ‘Apple’ in its different areas of activity:

Apple and Foxconn have been unethical, and we can see this from various sources across the web mainly being newspapers that are reporting that Apple and Foxconn have used child labour to create the Iphone X. The business ethics issues that effect society are ethics in Finance, Human Resource Management and Sales and Marketing.

Ethics in finance are mainly things like bribery, executive pay and lobbying. it is a concern to society because it involves all sorts of corruption which is against the law and as a result very unethical. Ethics in human resource management (HRM)includes discrimination against race, sex and sexual orientation etc, worker surveillance and is a concern to society because it is about the rights of society and employees of the business. Ethics in sales and marketing cam be spamming, shills, product placement as well as green washing are concerns to society because it is just a way of generating sales and can be a hindrance to many people.

The implications of these issues for the business are different for each issue. For ethics in finance the business can face legal and regulatory concerns if they are caught demonstrating insider trading. The business is currently keeping a close eye on the stock exchange activity within the business to make sure no one is taking advantage of it. For ethics in sales and marketing faces a potential bad reaction from customers if they keep green washing their products in marketing. Currently the business is doing nothing to address this. As for the child labour Apple face legal concerns as it is against the law. According to the report Apple let the children go and pay for their education in a school of their family’s choice.

Apple might deal with the issue of Child Labour by eliminating the problem and sticking to their code of conduct which states ‘it will not employ workers under the age of 15, or under the legal working age in any jurisdiction’. This is not Apples responsibility fully as Foxconn are the manufacturers for Apple in China and they are employing the workers not apple. Apple should’ve probably kept a better eye on this as their reputation was on the lien and they trusted Foxconn entirely.

Like previously said according to the report in the Guardian Apple dealt with the issue ‘ the children were returned to their families and the employer was ‘required to pay expenses to facilitate their successful return’. Although 95% of the facilities scrutinised by Apple complied with child labour laws, transgressors were told to return minors to a school chosen by their family, pay for their education, and give them an income equal to their factory wages.’ However not all Child Labour problems are solvable. If you stop child labour in developing countries where children are working because the family needs to extra income they might resort to other jobs such as stone-crushing, street hustling, and prostitution. Jobs that are far more horrendous than working in a factory. This means that in the long run stopping child labour in this case may have more harm than good. If Apple doesn’t address this issue the will face a number or legal problems. They will face the law in each country if it is found that people are working under the legal age, which as an example is 16 in China.

Impacts on the Stakeholders

Customers

This issue might affect an Apple consumer as they won’t want to purchase a product they know has been made by a child that has lost its childhood and education. That is how it may affect the consumer emotionally, however physically it may have an impact on the price of the product if it is made by children they will be paid less therefore the sales price may be slightly lower. The employees will be emotionally affected as they may feel uncomfortable working for a company operating child labour.

Government

This issue might affect the Government of the country in which Apple is employing underage children in as they will have to deal with the situation by potentially having to spend money on providing an education for the children so that working isn’t the only option of them and their families.

Employees

This issue might affect an Apple employee as they may not feel comfortable working for a company that hired underage children to make their products. It may seem unethical to the employer to be promoting an unethically made product especially if that employer is a Sales Worker on the floor of the store interacting with the customers all day.

Owners / Shareholders

The affect that this issue of Child Labor could have on the Owners / Shareholders is huge. Once the public is informed about the fact that the company is operating child labor they might not be so keen in spending money in company and will avoid purchasing products from Apple. This would affect the shareholders as they have invested in the company but if there is a drop in sales there will be a lower profit gain meaning the shareholders are likely to get less out of the business than they put it.

Pressure Groups

Child Labour issues like this one affect pressure groups as they need to act on it. The importance of dealing with a situation like this is extremely high and can affect the pressure groups as they will need to come up with a suitable way forward for all involved but most importantly maintain safety for the children by standing up for their rights.

Suppliers

This issue can affect the suppliers as when the Child Labour scandal goes public people might associate it to not only Apple, but to their supplier as well. Therefore, it creates a bad reputation for the suppliers and they might suffer from a drop in sales, and customers (companies) wanting their supplying services.

Apple has been accused of discriminating against females, which means they are unable to move higher up in the company as CEO jobs are commonly reserved for men. This may affect the image of the business causing people to sale their shares in the business. Apple may lose female customers because if it gets around that they aren’t getting equal treatment in the workforces those outside might decide not to support the company. There are a number of pressure groups that support this kind of diversity such as: National Organisation for Women and they help equalise the opportunities in which females get in the work environment with males.

Apple has also been under scrutiny for not paying U.K taxes, even though they have made loads in European operations. This may affect the employees as they may not want to work for a company that can put them at risk of criminal activity such as not paying taxes. This also highlights to Apples consumers that they are all about themselves and will do anything to spread the company wider however, their ‘everything’ may not be done in the correct and right way. This is unethical as everyone else in the U.K and around the world are paying taxes so why can’t Apple. The citizens of the U.K are really annoyed about this as they are missing out on taxes to help pay for roads, hospitals and airports especially when companies like Apple are making a large profit from the U.K as well as using the roads and airports. For this issue there are pressure groups such as: UK Uncut and they help raise the awareness of customers as to which companies aren’t paying taxes.

Ethical Concerns of the Communities

Apple and FoxConn

• Local Community

The local community is affected as a result of child labour. The main reason why is because due to the children working gruelling hours in the factory, they have no opportunity for education as a result. This is having a negative impact in pollution also as the factories are terrible for the environment emitting harmful fumes. Foxconn is ethically wrong for doing this as they are almost taking away education from the children and make them work in gruelling conditions for as little as $2.05 an hour equalling to around $400 a month excluding the long overtimes.

• Regional and National Community

The ethical concern for the regional and national community Is mainly to do with the environment. Foxconn own many different factories in china especially for apple and will create and emit a lot of pollution which is spreading across the seas in countries close to china such as Taiwan. As a result one country doing something unethical will go to other countries and damage not only chine but other countries in Asia. Stakeholders might see that the company is being unethical and would be less likely to invest in the business as a result as they wouldn’t want to contribute to something that’s negative to the environment.

• Pressure Groups

Environmental pressure groups consistently force issues into the public’s attention and therefore pressure both governments and business leaders into action. In terms of Child Labor, U.N.I.C.E.F is a pressure group that stands up for children’s rights. Along with promoting the importance of education for children living in communities where work seems like the only option U.N.I.C.E.F will fund the education. The roles that pressure groups such as U.N.I.C.E.F play in encouraging these businesses to act ethically is extremely vital and so important as without them the businesses would just do whatever is easiest.

• Overseeing Bodies

Over seeing bodies such as the World Trade Organisation (WTO) and Governments are needed to deal with these ethical questions that concern us about our businesses. National, Continental and International bodies are taking all sorts of action to monitor the activities of business around the world.

Examples of these overseeing bodies are:

• UK Government
• United Nations (UN)
• European Union (EU)
• World Trade Organisation (WTO)
• World Health Organisation (WHO)

In terms of the Environment and Child Labor concerning the community due to unethical behaviour from Foxconn and Apple there are ways they could eliminate these.

Environment

The environment is not just having an effect in one community but is traveling on and having a second hand effect on neighbouring communities – much like the ‘second hand smoking effect’ only this is second hand pollution.

Due to the business acting unethically and producing masses amounts of pollution from Foxconn factories manufacturing Apple products the environment is having a beating. This is effecting the rise of global warming aiding it to go faster. The mining of the raw materials is also impacting our environment badly as they are not going about it the correct way.

Ways in which Apple can eliminate these unethical environmental concerns is by hiring another company to manufacture their products, although this may mean they need to spend more as one company may be more expensive than another. However, by doing so Apple will no longer be seen as acting unethically as they will not be associated with an unethically partnering company.

Foxconn however can eliminate these unethical environmental concerns but it will take more than one step. They need to consider ways in which they can produce what they are producing but ethically. For example, they can start by sourcing the raw material in an ethical way such as mining in areas that are specifically designed to be mined in and recycling the waste materials they don’t use.

Child Labor

Child Labouring is a horribly unethical thing to be associated with and both Foxconn and Apple should be very ashamed of themselves.

Due to the hiring of underage children to work in factories manufacturing Apple products both Foxconn and Apple are guilty of this unethical act that is a concern the business needs to face.

Apple once again can eliminate this problem quite easily, they can drop Foxconn and find another company to manufacture their products, hopefully a company that doesn’t use Child Labour. Again this might cost them more but they should consider whether its worth saving their money of a child’s rights.

For Foxconn is little tougher to eliminate this problem as it a reputation they will always carry, however Child Labouring only occurs in certain communities where education is limited for children so working is really their only option. Foxconn can spend more money and open a factory to manufacture the products in another community or country (if needed) so that they can’t be exposed to the Child Labouring temptations.

The Environment and Child Labour concerning the community due to unethical behaviour from Foxconn and Apple can be prevented by considering and acting upon the suggestions I have made above but there is many more unethical concerns facing these businesses and those also need to be sorted before the business is somewhat considered ethical.