Business Ethics

Discuss as thoroughly as you can the following theses statements below:

Answer:
1. James Rachels analyzed the theory of cultural relativism and identified the three theses which
comprise its argument about the nature of morality: the diversity, relativity and toleration thesis.
Subsequently, Rachels proved why the theory of cultural relativism is a flawed theory in terms of
its argument structure as well as in its claim that morality is relative to culture. ( 30 points).

Cultural Relativism is a theory about morality and states that there are no “absolute” moral views or beliefs
that can be apply to all cultures, which means “ right “or “ wrong” is different in every society. What may
be “right” in one culture is viewed “wrong” in another. (Diversity). Customs cannot be considered “correct”
or incorrect” for it will imply that there exists an independent standard of right and wrong. “Different culture
have different moral codes.” (Relativity). Thus, no one has the right to judge another culture because there
is no universal standard of morality. (Tolerance).
In certain nations of Africa, for example, all young females undergo “excision”, a ritual practice that creates
great pain, and even death to young girls but for them it is their way to welcome adulthood , to tame women
to indulge in sex and be loyal to their husbands commonly . It is commonly referred to as “ female genital
circumcision” in the West and is considered by other cultures as “wrong. Another example is the story
recounted by King Darius about the Callatians who ate the bodies of their father as a sign of respects and
attachment. Their treatment of the dead is very much opposite with the Greeks into which cremation is their
way to bury dead. Both culture found each other customs horrible but we cannot tell that both their actions
are wrong basing on their cultural codes.
Rachel identified three theses in analysing cultural relativism with Objections/ flaws in the argument
structure and that morality is related to culture.
First is “Diversity Thesis”. Different cultures in fact disagree in their moral beliefs. Cultures exhibit
vastly different attitudes toward adultery, premarital sex, property ownership, violence, killing etc.
Objection: While there is variation in moral beliefs, the apparent diversity in moral beliefs can be based on
“differences in circumstances and in non-moral beliefs” and are NOT directly related to questions of
morality. Example are the Eskimos who commits infanticide unpunished. Female babies are mostly the
ones easier disposed than the male who are considered the primary food providers. Eskimos practice does
not mean they don’t regard life but this is only a drastic measure in order to survive the hard life. They do
other options like giving babies to unfertile couple. Infanticide is only a last resort only in order to survive
the circumstance of hard life or choosing between the whole families to survive or retain the infant.
Relativity Thesis states that the rightness or wrongness of moral beliefs can be determined only in
relation to the culture or moral tradition of the individuals who hold them. For cultural relativist,
“Different culture have different moral codes”. This is the key to understanding their morality. There
is no considered independent standard. Their customs, beliefs, or morality are all culture-bound.
Objection : The fact that the moral beliefs differ may only show that some beliefs—or perhaps all of them—
are false. From the fact that different people have different moral beliefs about some issue, it does not
follow logically that there is no objective truth . When two people or two groups have different beliefs, at
most all that follows is that at least one of them is wrong. Example in the belief that earth is flat or
spherical in shape. It does not follow that because some people disagree, then there is no objective
truth in geography. The mistake is to derive conclusion from the mere fact that the people disagree.
Toleration Thesis for cultural relativists states that we should s towards others culture’s practices.
‘Toleration’ presumably means refraining from using force to impose the moral beliefs of one’s own culture
on others. Tells us to prevent ethnocentrism or feeling that one’s culture is dominant and so others must
abide.

2. The concept of “corporate social responsibility” refers to a set of values, policies, mechanism and
practices established by a business organizations to address concerns ( generally social in nature)
that are beyond the role of businesses as creators and maximizers of profit. It may be understood
as business organization’s response to the demands and concerns from its external stakeholders.(35
points).
Answer:

Operations Mgt and Sustainable Chain Development, Sustainabily in the Supply Chain ( Heizer et
al, 2017) p. 232.
Page 19
Answer:

Consumers consider more than quality goods and services when choosing a brand. Many are
prioritizing corporate social responsibility (CSR), and holding corporations accountable for
effecting social change with their business beliefs, practices and profits. In fact, some will even
turn their back on their favorite companies if they believe they're not taking a stand for societal
and environmental issues. This creates a Movement aimed at encouraging companies to be
more aware of the impact of their business on the rest of society, including their own
stakeholders and the environment. [1]

Corporate social responsibility (CSR) is a business approach or self regulating model that
contributes to sustainable development by delivering economic, social and environmental
benefits for all stakeholders. ( 3TBL/ 3 Ps People, Profit, Planet).
"Corporate responsibility is simply a way for companies to take responsibility for the social and
environmental impacts of their business operations.
It is holding the corporation accountable for its own, the people and the environment.
CSR creates a filter on the actions of the company. It makes them accountable and ethical.
CSR is a concept with many definitions and practices. The way it is understood and
implemented differs greatly for each company and country. Moreover, CSR is a very broad
concept that addresses many and various topics such as human rights, corporate governance,
health and safety, environmental effects, working conditions and contribution to economic
development. Whatever the definition is, the purpose of CSR is to drive change towards
sustainability.

An example of CSR that is common practiced by corporations in the Philippines are:

1. Environmental efforts: One primary focus of corporate social responsibility is the

environment. Clean Air Act was law passed to prevent pollution and maintain clean air act.
Many auto companies designed car units that at lessen or minimize emission of smoke.
2. Philanthropy: Businesses can also practice social responsibility by donating money,
products or services to social causes. Example is the typhoon or calamaties. Juat this week
Camarines was heavily flooded by typhoon Usman. Small and large companies have donated
water and food to the people. Larger companies tend to have a lot of resources that can benefit
charities and local community programs.
3. Ethical labor practices: By treating employees fairly and ethically, companies can also
demonstrate their corporate social responsibility. This is especially true of businesses that
operate in international locations with labor laws that differ from those in the United States.
4. Volunteering: Attending volunteer events says a lot about a company's sincerity. By doing
good deeds without expecting anything in return, companies can express their concern for
specific issues and support for certain organizations.
Unilever is a multinational corporation, in the food and beverage sector, with a comprehensive
CSR strategy. Thus , the company has been ranked ‘Food Industry leader’ in the Dow Jones
Sustainability World Indexes for the 11 consecutive years and ranked 7th in the ‘Global 100
Most Sustainable Corporations in the World’.
One of the major and unique initiatives is the ‘sustainable tea’ programme. On a partnership-
based model with the Rainforest Alliance (an NGO), Unilever aims to source all of its Lipton
and PG Tips tea bags from Rainforest Alliance Certified™ farms by 2015. The Rainforest
Alliance Certification offers farms a way to differentiate their products as being socially,
economically and environmentally sustainable.
 3. For Milton Friedman, “there is one and only social responsibility of business- to use its resources
and engage in activities designed to increase its profits so long as it stays within the rules of the
game, which is to say, engage in open and free competition without the deception of fraud.” For
Edward Freeman, in the meantime, “a stakeholder theory of the firm must redefine the purpose of
the firm. The purpose of the firm is quite different in a stakeholder view. . The basis of ethical
obligations that the business has towards its stakeholders and vice versa, is the relationships it enters
into with them.”

These two arguments or theories both have contention over what is the social responsibility of the business
and who should benefit from the corporation (e.g. stakeholders or stockholders).
R. Edward Freeman advocated the stakeholder theory, which suggest that a corporation has an obligation
to its stakeholders. A stakeholder is defined narrowly as the “suppliers, customers, employees,
stockholders, and the local community” (Jennings, 2012). The executives’ responsibility is, thus, to
manage the benefits of stakeholders. He also argues that society has demonstrated its support of the
stakeholder over the shareholder with laws and regulations of the twentieth century (Jennings, 2012).
( Discuss with example) The business social responsibility lies with its relationship with its stakeholders.
Freeman for example stresses customer service. Customers rely on the corporation to provide them
with the goods and services that they want and need, and customers are loyal to those businesses that
treat them well. A wonderful modern-day example of this situation is the software and electronic technology
company Apple, Inc. Apple is known for their phenomenal customer service, and as a result, people are
very loyal to this company. Customer loyalty is a big reason why Apple was named by Forbes as the
number one most profitable company in the world last year. Freeman explains how corporations depend
on the local community to grant them the right to build facilities. In effect, the local community benefits
from the firm’s tax base and both social and economic contributions. ( Ex. Infrastructure projects and
charity foundations ). The final group, management, must look after the health of the corporation. Part of
this job is ensuring that the relationships amongst stakeholders in the business remain in balance, and
in turn, management receives the same livelihood offered to the employees in the form of a contractual
agreement with the corporation. A state of balance among the relationship and life or work of employees
results in a healthy, productive and profitable company in return.
All of these stakeholders working together and having a say in the business is, as Freeman concludes
his argument, the proper way to run a corporation.
Friedman, on the other hand, rejected CSR as socialism and suggested it is not the role of corporations to
be socially responsible, but rather it is the responsibility of individuals (Friedman, 1970). Friedman hold
the belief that said business is only responsible for those that actually own stock in the business – the
owners, or stockholders. The social responsibility of the company is to increase its profits so long as it does
not engage in deception. Friedman is forgiving if the corporation acts socially responsible to benefit the
corporation; profiting shareholders is the reason why an executive is hired after all.
Friedman does not proclaim that directors can act in any way to maximise profit as they have to
abide by the law and follow ethical custom. He, however, excludes explicitly charitable activities
as they do not directly contribute to profit. A good corporation in Milton Friedman’s view is
not one that undertakes activities only because they are ethically sound, but because they
are economically viable.
But what Friedman failed to acknowledge that acting ethically can be a valuable marketing
proposition. By understanding the desires of consumers, a corporation can offer products and
services that match their ethical thresholds, thereby adding value to both shareholders and
consumers. For example is designing the best design of product that delights and add value in
life of the customers. The added value made customers loyal and made Apple the leading mobile
phone provider and owning the largest market share in mobile industry over the world.
The above theories have distinguished the nature and role of the corporations as pro-stakeholder
or pro-profit. Their activities or economic purpose are all indicative of what kind of ethical or moral
they practice and who is the most ethically responsible management.

Extra Question: The nature, role, and purpose of business in society determines which practices (in
business) are ethical, and which ones are not. In this regard, the notion that the primary purpose of business
enterprisers is to maximize shareholder value or profit maximization is inaccurate if not false. (35 points)
Businesses’ purpose including their nature and role they play in the society are indicative of what kind of
ethical or moral they practice. Friedman and Freeman’s theories distinguished the practices into pro-
profit or pro-stakeholder, respectively. In the field of business ethics, the central questions are: Which of
the two is more ethical and which one is not? Which one is a more ethically responsible management?
given its economic purpose?

Passing Total Raw Score=80