Critical Evaluation of Ethical Business Management Models & Theories

This essay provides a critical evaluation of the shareholder and stakeholder models of ethical business management. It begins with a detailed analysis of the stakeholder model, followed by an exploration of ethical theories, including Utilitarian and Kantian ethics, and their application in business contexts. The essay then examines the role of supply chains and corporate social responsibility (CSR) in promoting ethical practices, using real-life examples of multinational enterprises like National Australian Bank, PepsiCo, Nestle, and Nike to illustrate key concepts. The discussion addresses the challenges organizations face in meeting global demands while maintaining consistent ethical business practices. The essay concludes by emphasizing the importance of fulfilling ethical responsibilities towards stakeholders and shareholders to achieve ethical business management.

RUNNING HEAD: ETHICS AND BUSINESS
MANAGEMENT

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The discussion focuses on critical evaluation of shareholder and stakeholder model of
ethical business management. Focusing on essay structure, the initial section includes the
thorough analysis of stakeholder model. The next section comprises of ethics theory
including Utilitarian and Kant theory. The following part emphasizes on supply chain and
Corporate Social Responsibility. It also provides a reasonable example of real life business
organization. The key purpose of the essay is to reflect on key aspects of ethical business
management and the emerging challenges for organizations.
Stakeholders are the individuals that have an interest in the business and are affected
by the operations directly or indirectly. The stakeholder model includes employees,
customers, suppliers, creditors and government. Employees form the part of internal
stakeholders. They are the human resource of an organization responsible for performing the
given task. They Customers are the potential users of the product and services offered by the
organization. Suppliers are the people that provide essential raw material for the product and
services. Creditors are the individuals that provide financial aid to the organization. They
attain high interest as they have to avail their resources with interest. Government is the legal
bodies that check that company fulfils the legal responsibilities (Harrison & Wicks, 2013).
Shareholders model includes individuals that have a share in the business. They have
a high interest in the business as thy have invested their resources. To manage the business
ethically, it develops the responsibility of business organization towards its stakeholders and
shareholders. A business entity should provide timely salary to employees, right product to
customers, timely payment to suppliers, correct financial position to creditors, and abide by
the rules of government. It develops high duty of business to be transparent in its financial
transactions to provide clear and accurate information to shareholders (Pichet, 2011).
Ethical theories deals with ell defined standard of right and wrong. There are multiple
ethical theories including Utilitarian and deontological ethical theory. Organizations rely on
ethical theories to conduct business in an ethical manner. According to Utilitarian Ethical
theory, an action is consider if it promotes happiness and wrong if it tends to develop sorrow
and pain. An action is considered right and wrong depending on the outcomes (Mulgan,
2014). Focusing on Kant ethical theory, it states that the rightness and wrongness of any
action or activity does not depend on its outcome. An action is considered right if it fulfils the
ethical duty. According to this theory, placing emphasis on happiness is not a moral duty. A
business organization making false promises to its customer (stakeholder) to raise overall

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sales is violating the ethical norms. To attain respectable position in a market, a business
organization has to adhere to business ethics (Broad, 2014). Therefore, business organization
must develop a sense about right and wrong practices and opt for ethical business
management. Example: National Australian Bank is an Australian organization. Globally, it
is one of the ethical companies (Smith, 2014).
Supply chain is a network. This network comprises of multiple activities, people and
resources. The key activities include Processing, storing, managing, warehousing, and
distributing from point of manufacture to place of consumption (Christopher, 2016). It is the
ethical duty of business organization to provide healthy product. It should fulfil the benefits
that it claims to provide to its customers. Therefore, Business organization should rely on
healthy practices in product development. These practices should be included in every stage
of supply chain process. In the procurement stage, it should avail fresh and non-expiry raw
material for product development. This will assist in being ethical towards customers. In the
manufacturing stage, it should avail the use of right machineries free from impair. This will
assist the organization in accomplishing its responsibility towards labour (internal
stakeholder). In transportation and product distribution, it should avail the use of hybrid
trucks to minimize carbon mission. It will enable the organization to fulfil its responsibility
towards the society (external stakeholder). Example: PepsiCo, Nestle and Nike are some the
companies with best supply chain practices (Sheehan, 2017).
Corporate Social Responsibility is a business model that assists the organizations to
be socially accountable towards its stakeholders. Business organization should lay high
emphasis on fulfilling its CSR polices. It helps in boosting its employ morale and gaining
quality and higher productivity from its employees. Adhering to the CSR policies towards
customers assist in gaining their loyalty, higher engagement and raising more sales.
Additionally, it benefits the organization in building its brand image and enhancing its
reputation in this market. Key CSR includes minimizing carbon emission, improving labour
polices, and other sustainable approaches benefitting environment (Lindgreen & Swaen,
2010). Example: BM is a globally recognized automobile company. It has developed the goal
of helping one million people by the year 2020. It focuses on developing programs like ‘The
schools environmental education development project’. It is one of the companies fulfilling
its CSR towards the society. Additionally, many companies from automobile, travel,
hospitality, retail and manufacturing are committing to fulfil their CRS responsibility
(Morgan, 2019).

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Organization focusing on ethical Business management faces challenges for meeting
the growing global demand. Besides that, it develops a challenge for them to be consistent in
their ethical business practices.
The discussion summarized on the concept of ‘business ethics’. It is acknowledged
that stakeholders forms the part of business organization. Thus, a business should fulfil its
ethical responsibility towards stakeholders and shareholders for ethical business management.

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Bibliography
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Lindgreen, A., & Swaen, V. (2010). Corporate social responsibility. International Journal of
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Morgan, B. (2019, August 26). 101 Companies Committed To Reducing Their Carbon
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https://www.forbes.com/sites/blakemorgan/2019/08/26/101-companies-committed-to-
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Sheehan, B. (2017, June 16). Best Supply Chains from Companies Around the World.
Retrieved December 16, 2019, from Hollingsworthllc:
https://www.hollingsworthllc.com/best-supply-chains-companies-around-world/
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