Ethics Theory and Business Ethics

This report discusses the importance of business ethics and ethical theories in making critical decisions. It explores the concept of utilitarianism and categorical imperative with real-life examples. The report also highlights the ethical dilemma faced by ASOS Plc and how they overcame it. The limitations of utilitarianism theory are also discussed. Course code, course name, and college/university are not mentioned.

Ethics Theory and
Business Ethics

Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY ..................................................................................................................................1
CONCLUSION ...............................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
Business ethics can be understood as implementation of appropriate policies as well as
practices in relation to arguable controversial subjects (Alzola, 2017). These subjects essentially
comprises of corporate governance, fiduciary responsibilities, insider trading and many more.
Business ethics ensures a specified level of trust exists among business organisations and their
customers. It is also concerned with ethical dilemmas as well as controversial issues that are
faced by an establishment. These ethics are considered as significant as they have long lasting
implications on numerous level. Due to increased awareness of environmental, social as well as
issues related to governance, business ethics plays an important role. Ethical theory aids in
making critical decisions in an ethical manner. It essentially improves confidence as well as
competence in order to make future decisions better. In order to better understand about business
ethics as well as ethical theory, ASOS Plc has been taken as an example for consideration. ASOS
Plc is an UK based online fashion as well as costematic retailers which primarily aims young
adults with their products. ASOS Plc has its headquarters at London, United Kingdom.
This project report highlights an understanding of ethical theories in relation with the
perspective of performing business operations in an effective manner. It also demonstrates real
life examples in relation to professional practice for portraying ethical dilemma.
MAIN BODY
Ethical theories
Ethical theories can be described as an attempt which provide a clear and unified account
in relation to obligations of an organisations (Arnold and Bowie, 2019). Ethical theories aid
business organisations for being socially responsible instead of indulging solely in gaining
profits. These also help organisations in attracting varied customers as people seeks to procure
goods from those brands which have adopted corporate social responsibility and viable practices.
These theories in organisational setting enhances the legislative practices in relation to
acceptable behaviours beyond government control. Organisational managers establish business
ethics which promotes integrity among their personnel as well as gain trust regarding their
significant stakeholders. These theories aid organisations in determining what is adequate for
them in regards with any given situation. Explanation of ethical theories in relevance with
examples in relation to professional practice are mentioned below:
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Utilitarianism theory
Utilitarianism theory is considered as widely used as well as most common ethical theory
which suggests that organisational managers should properly conduct their operations for the
greater good of an community (Blay and et.al., 2018). This theory proposed that good practices
can be assessed through the effect it has provided to specific parties in an effective manner. It
has been said that end should justifies the means which is considered a classic expression in
relation to utilitarian thought process. Utilitarianism essentially describes whether an attempted
action or consequences have a bad or good aspect. It considers happiness as well as pleasure as
good aspects whereas other elements are marked as bad. It can not be indulged in aspects
regarding feelings, emotions and culture.
Illustration 1: Utilitarianism theory of ethics
Source: Utilitarianism A Moral Theory.2022
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In business parlance, utilitarianism can be described as an obligation for business
organisations which implies what practices can be adopted for maximising pleasure as well as
minimizing sufferings of their employees (Brink and Esselmann, 2020). It is a practice which
essentially criticises basis of behaviour that can cause harm to any one at workplace. For
instance, consider the case of child labour whereby right-based approach believes that it is wrong
to hire a child as a worker. However, utilitarianism theory focuses on its outcomes which
suggests that if more happiness can be gained by providing a job to a child it is considered as
ethical.
A report has been published which reflect on increased carbon emission practices of ASOS Plc
which led them to adopt sustainable practices in order to make their position viable.
Another example of utilitarianism theory at workplace is an organisation is facing high
operating cost and low profits which land managers into issues regarding inability to continue
their business operations on given deadlines. First option which is rest to organisational
managers to fire their employees in order to reduce their operational cost. Second option
provided to organisation is to employ foreign workers at low salaries in order to sustain their
productivity levels. In accordance with Utilitarianism, company can go for second option which
led them to raise salaries of their foreign employees and also increase their market share.
Ethical dilemma is also left with managers of ASOS Plc whether they have to curb carbon
emission in their operations or operate with these practices for generating high profits. However,
it is hampering the company's image in market and led in reduction of their profits.
Utilitarianism is essentially correlated with several benefits which led organisations to
increase their productivity as well as teamwork efficiency (Conill, Mohn and Schonwalder-
Kuntze, 2017). However, it is almost impossible to adopt this theory in organisational setting as
people think of themselves at first before thinking about greater good of their peers or
community. In general terms, for example if an individual is choosing an ice cream than it will
be the one which provides them great pleasure.
This theory is used by managers of ASOS plc for determining the right aspects from
wrong elements by focusing on their outcomes in a strategic manner. It said that most ethical
choice will be one that is considered good for greatest number of people in an organisation. It is
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used by managers of ASOS Plc for weighing the well-being of everyone in order to curb any
ethical dilemma. It is used by managers of ASOS Plc in promoting greatest good for massive
number of people in an effective manner. As it summarises that good things are considered as
those elements which can bring maximum happiness as well as progress to people in an effective
manner. It also emphasizes on adopting on neutrality in an establishment. This component has
made the utilitarianism theory an impartial one as it concludes status as well as interests of
individuals as equal.
Under this, act utilitarianism essentially concentrates on the attempted actions through
analysing it whether good consequences are produced or bad. For example, a pharma
organisation can operate on the principle that it will launch any officially approved medicine
among with its varied side effects as long as it aid patients in combating a disease as compared to
the number of people to whom its side effects incurs. It has been assessed that benefits as well as
side effects should be sufficiently limited in order to prove pharma company is operating with
ethics on the grounds of act utilitarianism.
These are the aspects which are used for determining what should be done and how
actions are performed in a critical manner in order to provide greatest utility (Statman, 2019). It
is considered as most natural interpretation of the ideal related to utilitarianism. It has been
assessed that if aim of an organisation is to produce results, it is imperative for managers to
determine the right things as per the available options. It is considered as advantageous for
organisations as it can make moral questions as well as provide objective answers. If an
establishment has adopted act utilitarianism practices in their operations then their every decision
will be based on actual as well as foreseeable consequences in an effective manner. Act
utilitarianism believes in maximizing overall utility in regards with individual acts. At the
contradictory to this, rule utilitarianism is concerned with maximizing utility through setting up
of a moral code in relation to rules in a strategic manner.
Second aspect of utilitarianism is concerned with rule which suggests that determined
option or choice should attempt for maximizing profits of an organisation. Under this type of
utilitarianism, focus has been given on the rules as compared to individual's actions in a strategic
manner. It aids organisational managers in aiding the largest number of employees by using the
possible fairest methods (Duska, 2022). For them rules are considered as determinant for
determining regarding good and bad. Business executive embrace consequentialist approaches
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for solving their ethical problems as these are considered as compatible in regards with
traditional business thinking.
An example of rule utilitarianism in relation to organisational setting is offering products
or services at differential rates to different customers. As in case of airline industry, varied types
of services such as business, economy and first class are offered to differential customers as per
their affordability as well as their choice. This exercise delivers the greatest good to a large
number of customers and also provides massive benefits to airline company also. Expensive
business class product aid airlines in providing economy services to their customers in a strategic
manner.
Major key difference in respect to act and rule utilitarianism, former is applied directly to
the evaluation relating to individual's actions whereas latter one is concerned with formulation of
rules (Stavrova, 2020). In rule utilitarianism, after ascertaining the rules, actions of people are
evaluated on the basis of their actions.
In relation to ASOS Plc, utilitarianism theory was used by managers in making a
decisions for greater good of a vast majority of people. Managers of ASOS Plc have considered
to use this theory by establishing a brand named 'MATE the Label' which is concerned with
creating clean essentials in regards with certified fabrics as well as low impact dyes (How
Ethical Is ASOS. 2022). Goal of this project is to provide clean product which is sustainable as
well as beautiful. As per this project, managers of ASOS Plc have started to use recycled content
for packaging. This project led to increase their operational cost and reduce profit margins. This
brand is founded as well as predominantly operated by women. This brand is essentially
concentrates on providing a greater good to a majority of women so that they can gain
confidence and dignity. Example of ethical dilemma is plant faced clothing offered by ASOS Plc
in order to adopt sustainable and ethical practices while ignoring their profits for a greater good.
At last, by overcoming from this ethical dilemma, they have chose to adopt sustainable practices
in their operations which also help them in gaining people's trust and viability of brand in an
effective manner.
By using this utilitarianism theory, employees of ASOS Plc have gained insights into
adopting sustainable practices even if this practice are reducing their profit margins. This theory
has helped them to think to strategies their operations and create a balance between adoption of
sustainable practices and generating profits.
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It also has been analysed that ASOS Plc use some eco-friendly and sustainable practices
but it is not evident that they have minimized their textile waste to the lowest. Managers of
ASOS Plc are working on implementing sustainable practices as well as ethical practices but
these led to reduce their profit margins. These are just some signs of green-washing of ASOS
Plc. They are often indulge themselves in ethical dilemma of generating high profits or
implementing sustainable practices. By using utilitarianism theory, they motivate their
employees to adopt practices which are considered as sustainable in practice.
Apart from this, managers of ASOS Plc are trying to build their supply chain transparent as well
as ethical. They believe that transparency is considered as foundation of delivering tangible as
well as long-term benefits for individuals in fast-pacing fashion industry.
Limitations of utilitarianism theory are concerned with focusing on majority aspect while
ignoring minorities which lacks mutually beneficial relationships. It is imperative for
organisations to keep their promises as well as put ethics as par with their profits. There are
varied limitations of utilitarianism theory which can led business organisations in hampering
their brand as well as viability.
These ethics are difficult to attain while practising business operations effectively. It led
issues to organisational managers to maintain their workplace culture (Werhane, 2019). Almost
every business organisations uses capitalistic economy as well as monopolistic competition
which led them to flourish their business on the expanses of others. This approach can not
certainly predict the consequences at current time period but its results can be measured in future
(Dziubaniuk and Nyholm, 2020). This thought process also led trouble in measuring the values
regarding justice as well as individual rights. For instance, four people are admitted in hospital
need transplantation for heart, lungs, kidneys and liver. It does not mean to capture one healthy
person and save four lives at the expense of one. Through this example, it can be proved that
utilitarianism is a situation based approach which can be modified with specified circumstances.
Categorical Imperative
It can be understood as normative ethical theory whereby it suggests to maintain respect
of human rights and dignity (Freeman, Parmar and Martin, 2020). It is developed by a well
known professor named Kant due to this it is also considered as Kanatain theory. It is considered
as deontological philosophical theory which is used for ascertaining motivating factors of
employees in an organisational setting. It also argues to provide equal rights to people and treat
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them as ends rather than means. Major challenge which indulges in this type of categorical
imperative is to investigate extensively regarding motivating forces of people for performing
their duties in an effective manner.
This theory is concerned with two suppositions which proposed that humans must act on
the basis of goodwill rather than self-interested benefits which are beneficial for one at the
expense of others (Tajalli and Segal, 2019). It also argued that humans should not be treated as
means for reaching to a certain level of excellence. Kant believes that there should be rational
morality which aids in seeking as well as discovering universal laws that help in taking a rational
decision. Kant has bifurcated two types of imperatives, namely, hypothetical and categorical.
Hypothetical imperatives are concerned with giving a contingent command which are essentially
based on differential conditions. As contradictory to this, categorical imperative guides all the
actions taken by humans or employees. Kant has described the meaning of imperative in his
theory whereby it states that it is important actions that an human has to take. For example, if a
person is feeling thirsty then it is imperative for them to drink water.
Illust
ration 2: The Formula of law of nature
Source: Kant and the Categorical Imperative. 2018
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This theory has certain limitations such as it suggests that what type of actions are
undertaken as good but not the righteous things that are done in a particular situation. It has been
assessed that people rarely work on a unconditional basis, they always want something return of
their performed task (Hirschauer, Jantsch and Musshoff, 2018). Kant has suggested to treat
people as ends irrespective of means however, he does not provide any alternative solution
regarding special circumstances. It is imperative for organisational managers to make moral
decisions and not everyone is able to that in a rational manner.
For instance, numerous organisations have developed their code of conduct as well as
business ethics in order to make their organisations viable and productive. In relevance with
ASOS Plc, they have developed their business ethics as well as code of conduct through
respecting, protecting and work with dignity for their employees and customers. They considered
this as their responsibility to make sure that their workers are respected as well as protected in
regards with their supply chain. In order to realise their responsibilities they have collaborated
with their workers in order to monitor their supply chain. They address varied issues of their
people and tries to solve them in a strategic manner. They essentially condemns as well as
prohibits all forms of slavery which is flourished in modern world (Klikauer, 2017). They have
not indulged in forced labour whereby suppliers are encouraged to build and develop a
workplace apprenticeship programmes where they consider their legal age as well as minimum
wage requirements. At ASOS Plc, workers are not obliged to provide their extra hours in respect
with maximum overtime. They have provided their employees an opportunity to work overtime
on voluntary basis and get compensated with a premium rate on a constant basis. At ASOS Plc,
corruption as well as bribery is not accepted throughout their supply chain.
As per categorical imperative, managers of ASOS Plc should go for adoption of
sustainable practices in their operations rather than generating profits. As this theory puts human
dignity and sustainable practices before huge profit margins.
Employees of ASOS Plc are guided through utilitarianism theory for their ethical dilemma of
implementing sustainable practices in their operations rather than only looking for increasing
profits.
A real life example in relation with professional practices which portraying an ethical
dilemma is taking credit of other's work in front of the superiors. For instance, employees of
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ASOS Plc often work in differential teams for different functions such as marketing, advertising
and developing product or services in an effective manner. It is not imperative that all the team
members have worked and showed their individual efforts in attaining organisational objectives.
For instance, if there is a team of ten members for preparing marketing campaign and only 7
have worked extensively for accomplishing pre-determined objectives in an effective manner.
Remaining three have take their credit in front of their superiors while do not performed as per
their capabilities. It can be seen as that whole team has got praise where only seven members
have worked for achieving objectives in an effective manner (Melé, 2019). This is considered as
ethical dilemma for managers of ASOS Plc as they are appreciating their inefficient employees
which can hinder company's productivity in a long run. In order to solve this issue they can
practice utilitarianism theory which suggests to take decisions on the basis of greater good of
people in majority. As per this theory managers of ASOS Plc have to praise their whole team for
their achievements while not abandoning those who have not performed well in attaining the
organisational objectives. In order to solve this issue, work should be bifurcated to the employees
in a proportionate basis so that every employee perform the operations in an effective manner.
Apart from utilitarianism and categorical imperative theory of ethics, managers of ASOS
Plc can adopt virtue theory which considers person based rather than actions. It essentially looks
at moral character of a person which carries out an action irrespective of ethical duties as well as
rules. Virtue ethics does not essentially described the person's actions right or wrong. It provides
guidance which are to be possessed by a person whose characteristics as well as behaviours are
agreed to be attained (Parboteeah and Cullen, 2018). Virtue ethics are concerned with life of a
person rather than a specific incident or episode. This theory delves into a perspective whereby
good actions are appreciated and employees are motivated to build their behaviours as well as
attitudes. In context to business perspective, it aids in developing principles, tactics and
procedures in order to operate business activities. It aids in attaining economic success for
establishment. Although, acting virtuously does not guarantee high profitability rates as business
operations are affected on various other forces.
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Illustration 3: Three dimensions of Virtue ethics theory
Source: Research gate. 2021
In relevance with given real-life example regarding business dilemma, managers of
ASOS Plc can apply this theory by motivating to make modifications in regards with behaviours
and attitudes of remaining three team members. This practice led them to modify the attitudes of
their employees and make indulge them in team work in order to attain organisational objectives.
With the help of this theory, managers of ASOS Plc can motivate their employees which led
them to act with objectivity, rationally and logically. It is imperative for employees of ASOS Plc
to make behaviour of employees virtuous in order to accomplish organisational objectives in a
strategic manner. It suggests that moral growth comes from people's choices rather than framed
rules. Virtue ethics in business perspective relates with displaying virtuous behaviour at the
organisation. It is imperative for establishments to recruit those people who holds a set of moral
values which essentially guides their behaviour (Rendtorff, 2017). It is concerned with focus on
individual's behaviour about how they behave at workplace. It is helpful in assessing employees
on the basis of dishonesty, recklessly and compassionately. With the aid of virtue ethics theory,
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managers of ASOS Plc should assess the impact of adopting the sustainable practices in their
operations and should balance their profit margins and activities.
Example for virtue ethics theory can be employees who are virtuous in their behaviour
and attitudes are considered as more reliable and trustworthy in any specified situation.
Another example of the use of virtue ethics theory is concerned with personnel who displays
ethical behaviour at workplace which is based on their virtues in an effective manner. This can
be gain through displaying trustworthiness which led employees to become valuable one.
In relevance with real life example of ASOS Plc whereby managers are in dilemma of adopting
sustainable practices at the cost of reduced profits. This theory can be applied in that situation
which help in examines whether the employees are virtuous and want to grab varied
opportunities in a strategic manner. This theory is particularly based on the desired behaviour of
employees for adopting sustainable practices in an effective manner. It also delves in the aspect
of taking responsibilities which means that managers of ASOS Plc needs to solve the dilemma in
an exponential manner. By using virtue ethics theory is concerned with applying the sustainble
practice with the virtue of their employees in an effective manner. It is considered as useful
perspective for understanding the perceptions of employees towards adopting sustainable
practices. It implies that good community can be build by providing good to the members in a
virtuous manner. It restricts organisational managers in giving punishments for correcting the
ways of organisation.
CONCLUSION
From the above stated information, it has been concluded that it is imperative for
organisations to perform their varied operations by keeping ethics in mind. Business ethics is
considered as beneficial for organisations as it aid in enhancing customer loyalty as well as
avoiding stress regarding legislative issues in an strategic manner. Ethical theory refers to a
systematic way of approaching dilemmas or questions related with ethics as per certified
philosophical perspective. Ethical theories aid organisational managers in gaining insights
regarding the perspective of morality. It is important for managers of ASOS Plc to adopt
practices which proved them socially responsible in front of public which aids them in enhancing
their viability. Utilitarianism is concerned with taking actions in regards with good and bad
consequences. Virtue ethical theory is concerned with making employees of ASOS Plc to behave
in an appropriate virtuous manner. Categorical imperative is an ethical theory which was
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founded by Kant is also known by Kantian or deontology theory which essentially works on the
theme of maintaining human respect as well as dignity at workplace. It is imperative for
organisational managers of ASOS Plc to follow code of conduct as well as business ethics in
order to increase their brand image as well as viability in market. Virtue theory will aid
employees of ASOS Plc in gaining a specified behaviour which is considered as relevant and
reliable. This theory is considered as important for establishments as it assists them in motivating
their workforce to perform in a virtuous approach which led them to increase their productivity
level in a strategic manner. Utilitarianism theory essentially indulges managers of ASOS Plc into
making their operations which offers greater good to their employees and stakeholders in an
effective manner. Ethical theory emphasizes on the decisions that are made in regards with
producing greater happiness to massive number of customers in an effective manner.
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REFERENCES
Books and Journals:
Alzola, M., 2017. Character-based business ethics. In The Oxford handbook of virtue.
Arnold, D. G. and Bowie, N. E., 2019. Ethical theory and business. Cambridge University Press.
Blay, A. D. and Et. Al., 2018. The usefulness of social norm theory in empirical business ethics
research: A review and suggestions for future research. Journal of Business
Ethics. 152(1). pp.191-206.
Brink, A. and Esselmann, F., 2020. Value Positioning and Business Ethics: Keeping Promises as
Business Legitimation. Handbook of Business Legitimacy: Responsibility, Ethics and
Society, pp.297-309.
Conill, J., Mohn, R. and Schonwalder-Kuntze, T., 2017. Corporate citizenship, contractarianism
and ethical theory: on philosophical foundations of business ethics. Routledge.
Duska, R., 2022. Contemporary reflections on business ethics (Vol. 52). Springer Nature.
Dziubaniuk, O. and Nyholm, M., 2020. Constructivist approach in teaching sustainability and
business ethics: a case study. International Journal of Sustainability in Higher
Education.
Freeman, R. E., Parmar, B. L. and Martin, K., 2020. BUSINESS AND ETHICS. In The Power
of And (pp. 129-140). Columbia University Press.
Hirschauer, N., Jantsch, A. and Musshoff, O., 2018. Developing business ethics theory and
integrating economic analysis into business ethics teaching–a conceptualization based on
externalities and diminishing marginal utility. Review of Social Economy. 76(1). pp.43-
72.
Klikauer, T., 2017. Business ethics as ideology?. Critique. 45(1-2). pp.81-100.
Melé, D., 2019. Business Ethics in Action: Managing Human Excellence in Organizations.
Bloomsbury Publishing.
Parboteeah, K. P. and Cullen, J. B., 2018. Business ethics. Routledge.
Rendtorff, J. D., 2017. Cosmopolitan business ethics: Towards a global ethos of management.
Routledge.
Statman, D., 2019. Virtue ethics: A critical reader. Edinburgh University Press.
Stavrova, E., 2020. Old and New in Business Ethics Theory. Business Ethics and Leadership.
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Tajalli, P. and Segal, S., 2019. Levinas, weber, and a hybrid framework for business
ethics. Philosophy of Management. 18(1). pp.71-88.
Werhane, P. H., 2019. The normative/descriptive distinction in methodologies of business ethics.
In Systems Thinking and Moral Imagination (pp. 21-25). Springer, Cham.
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asos/>
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Utilitarianism A Moral Theory. 2022. [Online] Available through:
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