Introduction to Business Ethics, Assignment Help

Management - Introduction to Business Ethics,

Let's start with a case study of Merck and Company and know about how they faced the challenge of developing a drug that was potentially life-saving but which offered them with a little, if any, chance of earning a return on their investment.

The drug was Ivermectin, one of their best-selling animal drugs. The potential market for the drug was those suffering from river blindness an unbearable disease affecting about 18 million poor in Africa and Latin America. The disease is particularly horrendous: worms are about two feet curl up in nodules under an infected person's skin, gradually sending out offspring that causes deep itching, blindness, lesions and ultimately death (though many sufferers actually commit suicide before the last stage of the disease).

The requirement for the drug was clear. However, the sufferer of river blindness is almost exclusively poor. It seemed doubtful whether Merck would ever recover the estimated $100 million it would cost to develop the human version of the drug. Further, if there proved to be adverse human side effects, this might reduce sales of the very profitable animal version that were $300 million of Merck's $2 billion annual sales. Finally, Congress  was  getting  ready  to  pass  the  Drug Regulation  Act,  which  would  increase  competition  in  the  drug  industry  by  permitting competitors to more quickly copy and market drugs, initially developed by other companies.

Questions: Was Merck morally required to develop this drug?

Their managers ultimately, felt that they were. They even went so far as to provide the drug for free. This story seems to run counter to the assumption that, given the choice between profits and ethics, companies will always opt for the former. The choice, however, may not be crystal clear as this dichotomy suggests. Some have suggested that in the long run Merck will make profit from this act of kindness just as they are presently benefiting from a similar situation in Japan.

Even so, most companies would certainly not invest in an R & D project that promises no profit. And some companies often engage in outright unethical behavior. Still, habitually engaging in such behavior is not a good long-term business strategy, and it is the opinion of this book that, though unethical behavior sometimes pays off, ethical behavior is better in the long run.

The basic problem is the fact that the ethical choice is not always clear. Merck, as for Profit Corporation has responsibilities to its shareholders to make a profit. Companies that invest all their funds in unprofitable ventures will find themselves out of business.

This book takes the view that ethical behavior is the best long-run business strategy for a company-a view that has become increasingly accepted during the last few years. This does not mean that circumstances never arise when doing what is ethical will prove costly to a company. Such circumstances are common in the life of a company, and we will see many illustrations in this book. Nor does it mean that ethical behavior is always rewarded or that unethical behavior is always punished. On the contrary, unethical behavior sometimes pays off, and the good guy sometimes loses. To say that ethical behavior is the best long-range business strategy merely means that, over the long run and for the most part, ethical behavior can give a company considerably competitive benefits over companies that are not ethical. The example of Merck and Company suggests this view, and a bit of reflection over how we, as consumers and employees, respond to companies that behave unethically supports it. Later, we see what else can be said for or against the opinion that ethical behavior is the best long-run business strategy for a company.

This text aims to solve the ethical issues that managers of modern business organizations must face. This neither mean that it is framed to give moral advice to people in business nor that it is aimed at persuading people to act in certain moral ways. The main motive of the text is to provide intense knowledge of the nature of ethical principles and concepts and an understanding of how these are applicable to the ethical problems encountered in business. Such kind of knowledge and understanding should help managers more clearly see their way through the ethical uncertainties that confront them in their business lives-uncertainties such as those faced by the managers of Merck.

Business Issues

According to the dictionary, the term ethics has a variety of meanings. One of its meanings is: "the principles of conduct governing an individual or a group". We sometimes use the word personal ethics, for instance, when referring to the rules by which an individual lives his or her personal life. We use the term accounting ethics while referring to the code that guides the professional conduct of accountants.

A second-and more important-meaning of ethics, as per the dictionary, is: Ethics is "the study of morality." Ethicists use the word ethics to refer primarily to the study of morality, just as chemists use the word chemistry to refer to study of the properties of chemical substances. Although ethics deals with morality, it is not quite the same as morality. Ethics is a sort of investigation that includes both the activity of investigating as well as the results of that investigation while morality is the subject matter that ethics investigates.

This chapter deals with the case of B.F. Goodrich to explain these definitions. Kermit Vandivier was presented with a moral dilemma: he knew that Goodrich was producing brakes for the U.S. government that were probably to fail, but was required by his superiors to report that the brake passed the necessary tests. His had choice either to write the false report and go against his ethical principles, or be fired and suffer the economic consequences.

He goes for the former, though his moral standards were in conflict with his actions. Such standards include the norms we have about the types of actions we believe are right and wrong, like "always tell the truth." As Vandivier shows, we do not always live up to our standards.

There are more types of standards as well, such as standards of etiquette, language and law. Moral standards can be differentiated from non-moral standards using five features:

1.   Moral standards deal with matters which can seriously injure or benefit humans. For instance, most people in American society hold moral standards against rape, theft, enslavement, child abuse, murder, fraud, assault, slander, lawbreaking and so on.

2.   Moral standards are not based on or changed by authoritative bodies. The soundness of moral standards depends on the adequacy of the reasons that are taken to support and justify them; as long as these reasons are adequate, the standards remain valid.

3.   Moral standards, we feel should be preferred to other values, including self-interest.

It does not mean that it is always wrong to act on self-interest; instead it only means that it is incorrect to choose self-interest over morality

4.   Moral standards lie on impartial considerations.  The fact that you will benefit from a lie and that I will be harmed is immaterial to whether lying is morally wrong.

5.   Moral standards are related with special emotions and a special vocabulary (remorse, guilt, shame, etc.). The fact that you will benefit from a lie and that I will be harmed is inappropriate to whether lying is morally wrong.

Ethics is the regulation that examines the moral standards of a society or one's moral standards. It asks how these standards are applicable to our lives and whether these standards are rational or irrational i.e. whether they are supported by good reasons or poor ones. Therefore, a person starts to do ethics when he or she takes the moral standards absorbed from church, family and friends and asks: What do these standards mean for the situations in which I find myself? Do these standards actually make sense? What are the reasons for or against these standards? Why should I keep on believing in them?  What can be said against them and what can be said in their favor? Are they really sensible for me to hold? Are their implications in this or that particular situation logical?

Taking Vandivier as an illustration, we might ask if writing the fake report was really wrong given his responsibilities to maintain his family. Moreover, the company not Vandivier would be held liable for any faulty brakes. Finally, even if he did not cooperate and was as a result fired, the brakes would still be manufactured and installed. The results of writing the report or not would be the same, except that if he opts not to participate he would be fired. It is in view of such points that we begin to do ethics.

Ethics is the study of moral standards, the process of examining the moral standards of a society or person to determine whether these standards are rational or irrational in order to apply them to solid situations and issues. The ultimate objective of ethics is to develop a body of moral standards that we feel are sensible to hold-standards that we have thought about watchfully and have decided are justified standards for us to accept and affect to the choices that fill our lives. Ethics is not the only option to study morality. The social sciences-such as sociology, anthropology and psychology also study morality, but do it in a way which is quite different from the approach to morality that is feature of ethics. Even though ethics is a normative study of ethics, the social sciences engage in a descriptive study of ethics.