Relevancy of Ethics in Business Decision Making: A Case Analysis of IKEA

SBM3204: Sustainability and Ethics
[Document subtitle]Student Name
|

P a g e | 1
Introduction
Businesses, whether big or small faces various ethical dilemmas each day and annually.
Some dilemmas stem due to the origins seen within different situation and issues arising due
to confusion while making critical decisions where other dilemmas can occur due to
managerial and leadership approach. When business faces such dilemmas, profiteering can be
a strong motivation that influences decisions taken by the firms, however, such decisions
made can further create consequences ( Goel & Ramanathan, 2014). Whenever any decision
is taken by firms, they produce some consequences and despite excessive profit realised,
when businesses simply look into the other way around to avoid ethical disruptions, it is then
called ethics in decision making. Ethics, according to McFarlane (2013) is a code of conduct
which guides individuals while dealing with others. In businesses, ethics examine issues
arising due to unethical decision making while operating in business environment. With this
note, this critical review report will undertake a case analysis of IKEA operating in an
international environment to understand the relevancy of ethics for making business
decisions. This report will use information present in credible sources to make discussions
and detailed literature review. This report also proposes to find out whether ethics is relevant
for small businesses or not after reflecting upon IKEA’s case study to know how they
consider ethics in their decision making.
Literature review and discussion
Business ethics codes and policies provides businesses with potential analytical framework
that helps managers evaluate ethical managerial practice in general or for sustainability in
particular. The actions can be further examined to certain levels that can find out whether

P a g e | 2
they are good or not, illegal or legal so that management are able to judge certain strategic
codes before making business decisions, leading towards detailed action plan and priorities.
Presently, many business organisations are showing concern towards negative environmental
impacts and need for policies which can potentially minimise negative impacts (Lashley,
2016). Vitell, Ramos & Nishihara (2010) further supports the above view and finds that in
recent years, business ethics have been playing a critical role within business world. Indeed,
and in the extant theories within the scopes of business and sustainability, many of them
catered ethical practise among various business functions and have gained prestigious
position in business journals.
The relevancy of ethics in business decision making can be cited in current literature
where the authors state that ethics plays an integral role for bringing success or failures to
organisations. Regarding organisational needs, to take active role in formalisation and
promulgation of ethics, the viability and potentiality of such decisions can be examined in
current study. Salehi, Saeidinia & Aghaei (2012) states that discussion on business ethics is
very essential as businesses can go unethical and there are many evidences in the past that
shows unethical corporate practices. Additionally, the authors emphasise that considering
ethics in contemporary business management practices is specifically crucial as practitioners
face constant affects due to decision making (indirectly or directly) and every decision shows
relevancy to ethics, more or less.
Lashley (2016) suggests that many significant changes can be seen within the world
of economy that have made the concept of ethical practice more relevant for business-
decisions. Specifically, the author suggests that globalisation, technological innovations,
competition within similar industry, significant tangible assets and increase of economic
networks have fostered many changes towards ethical practice. Under such circumstances,
approaching business management depends on fostering relationship specially with

P a g e | 3
stakeholders of the company. Accordingly, the new economy makes the possibilities to forge
relationships with employees as well as diverse stakeholders, suppliers, customers, opinion
setters and pressure groups becomes crucial. Therefore, to build a protection against ethical
misconduct, many organisations are establishing ethics-based programs like education and
processes training courses and programmes that consist policies and frameworks explaining
company ethics. However, a series of processes and policies still identifies various
undesirable and desirable actions for which organisations are looking forward to more value-
led approach that can guide their business decision making behaviour.
In literature, there are many ethical theories that assists business managers to work
under ethics environment, nevertheless, it can also be cited that only one ethics-based theory
can work under particular situation at a time. Therefore, many theories developed by unique
philosophers and ethicists generally applies theories that can have diversified ideas that can
make questions answerable such as, ‘How to react under particular situation?’ or ‘What is the
correct way that can sort a critical issue?’ etc. ( Goel & Ramanathan, 2014). Every theory
related to ethics convey different notion on why actions can be counted ethical or not. Among
all, utilitarianism and Kantian theory is the most discussed theories presently in which
utilitarianism argues that the significance behind every moral action can be predicted on the
consequences based on the action whereas Kantian moral theory reflected more on moral
significance of action rather than what consequences it resulted due to the action taken. Thus,
Kumar, Reddy & Ramaiah (2014) suggests that if an organisation do not consider ethics in its
decision making, it might fall in marketplace and firms that remains committed for long-term
success, realises the significance behind creating a culture in which ethical behaviour are
encouraged and rewarded.