Ethical Issues in Business: Mistreatment of Employees and Exploitation of Consumers

This report discusses the ethical issues of mistreatment of employees and exploitation of consumers in contemporary businesses. It explores the consequences of these issues, analyzes them from ethical theories, and provides alternative solutions. The report emphasizes the importance of treating employees ethically and ensuring consumer safety.

APIIT
STAFFORDSHIRE UNIVERSITY
ASSIGNMENT
LANKA
ORGB60390 BUSINESS ETHICS
HF21A1IBM_HFK21A1IBM
Submitted by: CB009990| MubashsharaAmeerHussain
Assessment Type and Weight Hand Out Hand In
Individual Assignment (70%) 22-Oct-2021 18-Jan-2022

Acknowledgment
I would like to express my special thanks and gratitude to my module lecturer Mr.
MaheshKaluarchchi for his able guidance throughout this course. I would like to thank APIIT for
providing me the necessary support and facilitiesin completing this project.
I would like to extend my gratitude to my parents and fellow friends who supported in
completing this assignment.

Executive summary
The report maintains a key theme of ethically contentious issues in contemporary businesses.
The study is segmented into six major sections.The study commences with an introduction that
states the ethical issue from an ethics perspective. Next, the study outlines the two issues in the
area of applied business ethics, then the report lay emphasis on exploring the ethicality of the
issues. The report then ethically analyzes the issues from theoretical perspectives. The studybring
to light the application of these issues using practical examples from contemporary businesses.
These cases are then analyzed using ethical theories. The next segment of the report outlines the
ethical alternatives which recommend the alternative ways to do things more ethically in these
two scenarios. The report is then concluded with an elaborated conclusion containing summary
of all the phases of the report accompanied with references using the Harvard Referencing
system.

Contents
Acknowledgment.............................................................................................................................2
Executive summary.........................................................................................................................3
Introduction......................................................................................................................................5
Mistreatment of employees..............................................................................................................6
Exploitation of consumers...............................................................................................................9
Ethical alternatives.........................................................................................................................11
Mistreatment of employees........................................................................................................11
Exploiting consumers.................................................................................................................12
Conclusion.....................................................................................................................................13
References......................................................................................................................................14

Introduction
Business ethics is the standards for morally right and wrong conduct in business.Treating
employees ethically without violating their rights is crucial to any companies. Paying them
fairly, providing good work conditions, appropriate work hours, rest and avoiding child labor are
all part of ethical treatment of employees.Violating employee rights would create a culture of
distrust and potentially leading to expensive lawsuits.
Exploitation of consumer is violating the rights of the consumers, ensuring safe products are sold
to them which do not cause any damage to the consumers property or life is crucial. Failing to do
so will result in lawsuits and compensation
Contemporary organizations exploit their employees and consumers in various aspects but
ethical approaches have talked about the importance of protecting labor consumer rights in a
business. Various ethical theories have emphasized the importance of fulfilling employee and
consumer rights and these theories have stressed the importance of fullfilingthe duty of the
employer towards his staff and customers.

Mistreatment of employees
Many industries around the world exploit their workers in number of ways, following are some
of them,
 Underage labors
 Worker abuse
 Improper working conditions
 Improper work hour limits
 Overcrowded dormitories
 Chemical hazards and injuries
 Labor violations
Mistreatment of employees is something that every business must take seriously, as this
unethical act has consequences of emotional as well physical harm to the employees. This may
have lifelong impact. Any organization refraining from such unethical act can benefit from
increased productivity and the employer do not have to be guilty Infront of the law.
Following are the potential problems caused by these issues,
 This may affect the reputation of the company
 Lawsuits against the company
 Injured or death of employees
 Negative impact on the performance of employees and declining productivity
 Workplace trauma of employees and emotional and mental abuse
 Poor living standards
 Employee turnover
Ethics of Rights and Ethics of Duties theory: This theory is a form of non-consequentialism, This
theory was developed by the German Philosopher Immanuel Kant (1724-1804), According to
this theory “The rights and duties are related, the rights of a person imply the duty of another
person to fulfill that particular right.”(Soas.ac.uk, 2012). Viewing employee mistreatment in this

perspective it’s the duty of employer to fulfil employee rights and it’s the right of an employee to
receive fair treatment from employer and duty of an employer to offer the fair treatment.
Theory of Utilitarianism: It is one of the normative ethical approaches stemming from the late
18th and 19th century. The theory view that “A morally right act is an act that produces the greater
good or the most good.This is a form of consequentialism theory where the right action is
decided entirely upon the consequence produced by that action. Maximizing the greatest amount
of good for the greatest number of people” (Driver, 2014). Viewing employee mistreatment in
this perspective, Mistreating employees could save cost but that action did not maximize welfare
for the majority and caused a negative consequence to the employees (majority) and benefited
the company (minority).
Virtue ethics: It is a contemporary ethical philosophy developed by ancient Greeks. According to
Aristotle “By honing virtuous habits, people will likely make the right choice when faced with
ethical challenges.” (Ethics Unwrapped, n.d.) Viewing employee mistreatment in this
perspectiveexplained,if the company owner is virtuous person he would consistently choose to
do good acts for the right reasons, if he chooses to mistreat employees it comes from who he is,
his choices and his character.
Various forms of workplace mistreatment is available. “Findings from a U.S. national survey
showed 41% of employees reported nonphysical aggression, while 6% reported physicalattack at
work” (Schat et al., 2006). “The majority of studies conducted in Europe found that 10-15% of
the workforce experiences workplace bullying” (Keashly, 2011). “Consequences of mistreatment
for employees, organizations, and society include decreased employee health, employee
performance, quality of servicesand increased worker compensation claims” (Boyd, 1995).
(Donald Truxillo, June 2014)
Apple incorporation’s supply chain management issues, most Apple products are produced in
Asia and specifically within the Foxconn Factories in China. Apple has multiple accusations of
employee mistreatment. 50 percent of Apples suppliers violated supplier code of conduct.
Accusations include underage labors, bad working conditions, longer hours, dangerous
chemicals, falsified records, overcrowded dormitories, worker abuses that resulted in suicides.
Media focused on Apples largest supplier Foxconn which has background of enormous labor
violations. (Ferrell, Fraedrich and Ferrell, 2016)

Stakeholder theory: Approach says Mattel has obligations and responsibilities towards its
stakeholders.
(1) principle of corporate rights -Mattel Is obliged not to violate the rights of its customer.
(2) Principle of corporate effect- Mattel is responsible for the effect of action towards
customers.
Sometimes these ethical issues may not seem like big for the employers but it Is very important
and huge for the employees. If these issues were not addressed, Employees may eventually lose
trust in the organization. Employees who were harassed could sue the organization. Which may
result in financial loss.Poor morale of employees.Negatively affecting the productivity of
employees.Negative publicity of protestors affecting sales of the company.

Exploitation of consumers
Exploiting consumers by selling unsafe products, cheating consumers, giving false information
or not revealing all the necessary information about products.
All the businesses need to consider the ethical and legal implications involved in selling a
harmful product to its consumers. Selling unsafe products could cause serious harm to the
consumers this may also result in the company holding accountableInfront of law for selling
these products. It is the duty and obligation of the seller to ensure the products are safe. By doing
so, the company could gain better reputation, loyal customers and higher profits.
Following are the potential problems caused by these issues,
 The company could be sued or fined
 Consumer may suffer Injuries or damages
 This may affect the reputation of the company
 Consumers may claim compensation or refund
 Company could face pressure from consumer rights and consumer protection authorities
 Long term health impacts
The ethics of rights and ethics of duties theory is where the rights of a person imply the duty of
another person to fulfill that right. Viewing consumer exploitation in this perspective explained
it’s the duty of manufacturer to fulfil consumer rights and it’s the right of a consumer to receive
safe products from manufacturer and its duty of manufacturer to offer safe products.
The theory of utilitarianism where a morally right actis termed as an act that produces the greater
good for the greatest number of people. Viewing consumer exploitation in this perspective,
consumer exploitation could save cost but that action did not maximize welfare for the majority
and caused a negative consequence to the consumers (majority) and benefited the company
(minority).
Virtue ethics: if the company owner is virtuous person he would consistently choose to do good
acts rather than exploiting his consumers.
“It has been accepted that producer or manufacturer as responsible for the safety of products.
Apart from the producer or manufacturer, there are also other parties who are responsible for the

safety, such as retail stores. However, it must be remembered that safety is not the only concern
when the products are made, it is also important that other intermediary parties in the chain must
address its safety before it reaches the final consumer. The suppliers, retailers, producers and
distributors involved should comply with the safety requirements to comply with the law.”
(Salim Ibrahim Ali, June 2017)
Mattel Incorporation is a global leader in manufacturing toys. In September 2007 Mattel was
scrutinized over selling unsafe toys that contains lead paint. Later that month it was also found,
toys that has magnets which can come loose and pose choking hazards. Over 21M Mattel Toys
were recalled and parents filed lawsuits claiming Mattel Products harmed their children. Mattel
was later awarded the 2007 “Bad Product” Award by Consumers International.(Ferrell, Fraedrich
and Ferrell, 2016)
Stakeholder theory: Approach sayApple has obligations and responsibilities towards its
stakeholders.
(1) principle of corporate rights -Apple Is obliged not to violate the rights of its employees.
(2) Principle of corporate effect- Apple is responsible for the effect of action towards
employees.
Overlooking these ethical issues may destroy the brand, reputational loss, legal problems,Long-
term negative health impacts to consumers. Not taking measures to fix these issues may lead to
consumers losing their mutual trust towards the brand which leads to loss of brand loyalty.
Customers stop coming back which leads to revenue declining.

Ethical alternatives
Mistreatment of employees
Alternative: implementing and formalizing code of conduct, policies, guidelines and strict
protocols in the organization to avoid employee mistreatment.
It is necessary for any organization to implement protocolsto protect employee health and safety
such as proper safety equipment, guidelines and rules to follow when handling hazardous
substances, working conditions free of hazards, training the staff on dangers. In the case of
worker abuse, child labor, labor rights violations, the management must create a clear line of
communication so the employees could voice out for themselves, strict implementation of code
of conduct and policies and ensuring it is followed by people of every level of the organization
including the external stakeholders who are a part of the supply chain.
Employee safety rules and rights violations rules can be implemented at:
 In the supply chain, the supply chain must be given the code of conduct and protocols
 In the production floor
 Dormitories
 During recruitment (to avoid recruiting child labor)
 Employees should have rules imposed for transparently communicating and bringing
abuses, exploitations and violations to light without any fear.
Advantages:
Prevent legal problems and lawsuits, Employees can address and concerns this leads to positive
employee morale, Helps in clear communication on how things should be done, A productive
work environment.
Disadvantages:
When policies and procedures are formalized it restricts the company’s ability to make rapid
decisions such as downsizing, Resistance to change.

Exploiting consumers
Alternative: establishing safety standards for each products in the company and assigning a
compliance team at every level of the production process to ensure product safety. Formulate and
review standards.
Product safetystandards should be implemented, specification to testing methods, suitable test
equipment, audits must be carried out internally and externally to ensure the material, production
processes, techniques, methods used are all meeting the safety standards of the organization.
These standards must be established in the supply chain management as well to ensure safer raw
materials are supplied. Transparency must be increased throughout chain and communication has
to be open. Establishing a compliance team to ensure safety standards are met and they have to
work on improving safety in the organization.
The safety standards should be established at:
 Supplier level
 Testing raw materials
 Production process
 Quality control
 Final inspection
Advantages:
Increased customer satisfaction, reduction of costly errors, increased profits
Disadvantages:
The time involved, The cost of formulating and maintaining standards and certificates,
Resistance to change.

Conclusion
In conclusion the report discussed the key ethical issues in detail starting from executive
summary that summarizes every segment of the study followed by introduction stating the issue
identified. Then the report emphasizes the issue by analyzing the potential problems,
consequences of the ethical problemand a practical example for the identified ethical issues
along with ethical theories identified with the case. Then the report recommends alternative ways
to do things ethically in the situations outlined in the practical example and finally conclusion
briefing all the sections in orderly manner accompanied with detailed references.

References
Ferrell, O.C., Fraedrich, J. and Ferrell (2016).Business Ethics: Ethical Decision Making &
Cases. [online] Google Books.Cengage Learning. Available at:
https://books.google.lk/books/about/Business_Ethics_Ethical_Decision_Making.html?
id=A7oaCgAAQBAJ&printsec=frontcover&source=kp_read_button&hl=en&redir_esc=y#v=on
epage&q&f=false [Accessed 18 Jan. 2022].
Driver, J. (2014).The History of Utilitarianism. [online] Stanford Encyclopedia of Philosophy.
Available at: https://plato.stanford.edu/entries/utilitarianism-history/. [Accessed 17 Jan. 2022].
Ethics Unwrapped. (n.d.).Virtue Ethics. [online] Available at:
https://ethicsunwrapped.utexas.edu/glossary/virtue-ethics#:~:text=Virtue%20ethics%20is%20a
%20philosophy%20developed%20by%20Aristotle%20and%20other%20ancient
%20Greeks.&text=This%20character%2Dbased%20approach%20to [Accessed 17 Jan. 2022].
ResearchGate.(n.d.). (PDF) PRODUCT SAFETY AND PRODUCT LIABILITY. [online]
Available at:
https://www.researchgate.net/publication/319089789_PRODUCT_SAFETY_AND_PRODUCT_
LIABILITY [Accessed 17 Jan. 2022].
ResearchGate.(n.d.). (PDF) Workplace Mistreatment Climate and Potential Employee and
Organizational Outcomes: A Meta-Analytic Review From the Target’s Perspective. [online]
Available at:
https://www.researchgate.net/publication/262789480_Workplace_Mistreatment_Climate_and_P
otential_Employee_and_Organizational_Outcomes_A_Meta-
Analytic_Review_From_the_Target%27s_Perspective [Accessed 17 Jan. 2022].
Soas.ac.uk. (2012). 2.2 Deontological ethics. [online] Available at:
https://www.soas.ac.uk/cedep-demos/000_P563_EED_K3736-Demo/unit1/page_16.htm.
[Accessed 17 Jan. 2022].