Business Ethics: Unethical Practices and Stakeholder Impact

This report discusses the unethical practices of Ladbrokes, a British gambling company, and their impact on stakeholders. It explores the ethical concerns and identifies key stakeholders. The report also analyzes the ethical theories of utilitarianism and Kantianism. Additionally, it highlights the qualities required for ethical leadership and the creation of an ethical organization.

Business Ethics

Table of Contents
INTRODUCTION...........................................................................................................................3
PART 1............................................................................................................................................3
a) Explanation of ethical concern and identification of key stakeholder...............................3
Recommendations..................................................................................................................4
b) Ethical Theories.................................................................................................................5
PART 2............................................................................................................................................6
Qualities for ethical leadership and creation of ethical organisation.....................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Business ethics is concerned as philosophy that is related to decisive making capability of
business enterprise in order to check out that things are being done in right manner or not. The
term is also engaged with various moral issues so that it can easily be determine that business
activities are formulated morally correct or not (Idowu and et. al., 2013). Effective compliance
with all ethical values allows business associations in developing strong corporate image at
marketplace that is helpful in enhancing their productivity in rightful manner.
The current report relies upon case study of Ladbrokes, a well known British gambling and
betting company which is headquartered in London, UK. This project will explore all dimensions
of ethics associated with this company. It also provides explanation about Kantianism and
utilitarian framework related to the case scenario in order to determine ethical errors in it. In the
last section of this project, assessment of different qualities required for ethical leadership will be
explored for developing effective and ethical company.
PART 1
a) Explanation of ethical concern and identification of key stakeholder
The main aim of present report is to investigate about various types of unethical practices
that are incorporated by business enterprises and its influence over organisational performance.
With reference to Ladbrokes, it is becoming victim of frequent closure of their gambling store as
per the governmental instruction (Ladbrokes staff told to sign gamblers to online accounts to
avoid redundancy, 2019). In order to incorporate with this, they top most authority is firing
employees at constant basis. This has created interest of conflict at workplace because the
company is now opting for non rightful activities in order to fire employees from their
companies. This have also affected employment rate of UK because around 5000 people have
lost their job because 1000 shops among total of 3500 have been closed (Ladbrokes Coral fined
after customer lost £98,000, 2019). Here, the main wrong activity found by Ladbrokes is its way
of choosing employees for terminating them. In order to cope up with the huge loss, this
company has mainly targeted customer service managers for termination. They have placed offer
in front of customer service managers that one who will influence maximum number of
customers towards online gambling can secure their job.

This has created unethical dilemma in front of employees as directly or indirectly have indulged
in into wrong activity of influencing customers in order to secure their job. Overall this have
affected brand name of the company at marketplace a lot and also have indulged it is customer
service managers in ethically wrong activity.
This report have been developed by middle manager of Ladbrokes to its senior manager
in order to aware them about overall organisational scenario and unethical practices from which
they are going through. The major influence of this report is on ethical problem identified in
Ladbrokes associated with restructuring its workforce. In this, the company have emphasised to
keep only those employees with them who are successful in influencing maximum number of
customers towards online gambling. This issue can also influence the public image of the
company as it influencing interest of people towards gambling for their own profits (Weiss,
2014). The should also consider this case the serious issue and should emphasise on not
indulging in this kind of activity in future in order to keep interest and belief of stakeholders
towards them in positive manner. Another aim of this report is to guide managerial team of
company towards the scenario so that they can effectively execute their operational activities in
rightful manner without any kind of involvement of unethical business practice.
It is the social responsibility of the company to perform its each and every activity in
such a manner that does not place any kind of harm of society or environment (Ismaeel and
Blaim, 2012). Along with this, it is important for the business associations in execute their work
in such a manner that does not comes under unethical practice. For this, it is important for them
to comply with government legislation in order to establish positive corporate image in society.
Here, it can be said that the result of unethical practice of Ladbrokes will surely affect its
stakeholder’s interest. It mainly includes investor, employees, dealers, clients, suppliers, board
members, business associates, government etc. The major influence can be seen on its employees
as for protecting their jobs they have to indulge people in the wrong habit of gambling which
will ruin their life with the passing time. Therefore, it is essential for the company to take right
decision in respect of ethics, code of conduct, moral value etc. in order to maintain its image in
society.

Stakeholder Influence on each stakeholder
Customers Customers are seen as the key stakeholder of every firm. The unethical
practice adopted by Ladbrokes have impacted over its public image
negatively. As a result, customers of the respective company have also
perceived Ladbrokes negatively and will prefer to switch to another rival
company for attaining same services associated with gambling.
Employees Employees were really affected badly as they were always in the fear of
loosing their jobs. At the same time, they were also facing ethical dilemma
that they are influencing individual towards the wrong habit of gambling
for the sake of securing their own job.
Society Ladbrokes has closed its shops in bulk. This have impacted negatively on
the society as many people have lost their job due to closing of shop. As a
result, it has increased unemployment rate in London.
Owner Owner will not get adequate support of investors which will directly create
financial issues. Also, it will reduce their market image and profitability.
Government Initiative of Ladbrokes towards online gambling and influencing
employees for attracting more number of customers in order to secure
their job has affected government too. In order to deal with this, it is
essential for government to develop such practices and policies so that this
kind of things would not repeat in future.

Recommendations
On the basis of above discussion, it can be said that the unethical activities in which
company participated led to the establishment of negative image of organisation at international
scale. To enhance its goodwill in market place, it is suggested that entity should issue a public
bond whereby it should declare that the company would not ever engage in such practices in
future. Further, it is recommended that training should be imparted to employees making them
aware about ethical practices and legal norms so that they can report about any illegal activity
discovered by them to legal bodies and agencies. Lastly, it is suggested that the respective
corporation should appoint a person who would ensure that the activities of company do not
breach ethical code of conduct and legal practices.
b) Ethical Theories
Ethical theories serve as the base on which decision making within an organisation is
dependent. Utilitarian and Kant theories of ethics have been applied underneath to ascertain the
extent to which company breached the ethical code of conduct.
Utilitarianism
This theory seeks to distinguish right from wrong activities by way of emphasis on the
results of such actions. This is an approach which places focus on engaging in activities which
assure greatest good for maximum number of individuals (Dierksmeier, 2011). Taking the beliefs
of this theory into consideration, it has been analysed that the practice of Ladbrokes to ask its
employees to influence customers to participate in online gambling in order to secure their jobs
was ethically wrong. This can be said on the basis of the fact that as per the theory, this act of
organisation did not imply good for any person inside or outside the premises of company. To

save the operations of gambling of company from being closed after the law passed by
government, Ladbrokes engaged in the unethical practice (Ladbrokes accused of conflict of
interest over problem gamblers, 2019). However, no stance could justify the act of company as
the utilitarian theory was breached as a result of this unethical practice adopted by organisation.
Kantianism
This is a theory which seeks to take into account ethical principles at the time of taking
key business decisions. This theory emphasizes on giving respect and regards to people linked
with the decision (Godemann and et. al., 2014). With respect to the unethical practice of
Ladbrokes, it can be said that the act was not aimed at stipulation of respect to any of the
organisational stakeholders. Instead it breached the ethical code of practice and engaged its
employees also in ethical act of influencing people to engage in online gambling. This practice of
Ladbrokes was totally unethical from the perspective of Kant theory. As per this theory, it is
recommended to Ladbrokes to conduct few training sessions for employees, management along
with the top most authority. In this, training each and every audience will get information on
ethical practices as well as legal norms that are required to be followed by them while working
for the company. This will help the respective company in keeping themselves away from any
sort of unethical practices in the near future.
PART 2
Qualities for ethical leadership and creation of ethical organisation
Every business enterprise goes through different situation or might have several reasons
that influence them to indulge in unethical decision making. These reasons might be seen in the
form of higher pressure from existing stakeholders, major financial losses, management teams
greed, clever and tricky leader of company and many others. Each type of business association
has already formulated business values and code of conducts that are required to be complied by
them for maintaining organisational value among customers and executing its operational
activities in ethical manner (Crane and Matten, 2016). It is the responsibility of leader to ensure
that all employees comply with every sort of ethical terms. As being a leader, it is essential for
me to have range of effective quality and characteristics for becoming a highly effective leader.

These special qualities and characteristics which are required to be possessed by me are
explained below:
Gratitude: It is important for me to have higher range of gratitude characteristics in my
behaviour towards the employees for attaining organisational goals in quicker manner. For this,
it is essential for me to remain down to earth towards employees in order to develop healthier
relationship with them.
Humility: It is required by me to remain modest and unpretentious towards all
employees at workplace in order to ensure that I am always working for their growth only. It will
also contribute in creating healthy environment at workplace that will also support in gaining
organisational objectives in quicker manner (Hibbert and Cunliffe, 2015).
Justice: It is required by me to maintain justice at workplace in order to maintain dignity
of the company constant and ethical all through. It will increase their productivity as well as
profitability in quicker manner because all employees are motivated and committed towards
organisation that can be seen in the form of their level of performance.
On the basis of the above discussion, it can be said that by incorporating with ethical
practices at workplace I can easily develop healthier and sustainable working environment. This
is because, my workforce will feel comfortable with me and will surely share their issues that
could be addressed effectively. As a result, it will support in developing effective workplace
culture in positive manner.
CONCLUSION
As per the overall description provided in this project, it is comprehended that it is crucial
for companies to comply with each possible ethical terms and legal processes in order to avoid
any sort of dispute or misconduct in future. This will support them in developing strong and
effective organisational image among customers that will also contribute in increment of market
share of company. Along with this, it can be said that usage of utilitarian and Kantianism has
allowed company in implementing ethical and morally correct practices at workplace. Also, it
has been explored that humility, gratitude, magnanimity etc. are desired qualities and
characteristics of ethical leader.

REFERENCES
Books and Journals
Crane, A. and Matten, D., 2016. Business ethics: Managing corporate citizenship and
sustainability in the age of globalization. Oxford University Press.
Dierksmeier, C., 2011. The freedom–responsibility nexus in management philosophy and
business ethics.Journal of Business Ethics. 101(2). pp.263-283.
Godemann, J. and et. al., 2014. United Nations supported principles for responsible management
education: purpose, progress and prospects.Journal of Cleaner Production. 62. pp.16-
23.
Hibbert, P. and Cunliffe, A., 2015. Responsible management: Engaging moral reflexive practice
through threshold concepts.Journal of business ethics. 127(1). pp.177-188.
Idowu, S. O. and et. al., 2013. Encyclopedia of corporate social responsibility (Vol. 21). New
York: Springer.
Ismaeel, M. and Blaim, K., 2012. Toward applied Islamic business ethics: responsible halal
business.Journal of Management Development. 31(10). pp.1090-1100.
Weiss, J. W., 2014. Business ethics: A stakeholder and issues management approach. Berrett-
Koehler Publishers.
Online
Ladbrokes Coral fined after customer lost £98,000. 2019. [Online]. Available Through:
<https://www.bbc.com/news/business-49175515>.
Ladbrokes staff told to sign gamblers to online accounts to avoid redundancy. 2019. [Online].
Available Through: <https://www.theguardian.com/business/2019/feb/05/ladbrokes-staff-
told-to-sign-gamblers-to-online-accounts-to-avoid-redundancy>.
Ladbrokes accused of conflict of interest over problem gamblers. 2019. [Online]. Available
Through:<https://www.theguardian.com/business/2019/feb/08/ladbrokes-fobt-problem-
gamblers>.