Business Ethics: Corporate Scandals, CSR, and Ethical Practices

This essay delves into the realm of business ethics, commencing with an examination of organizational failures stemming from unethical practices, using the Enron scandal as a pivotal case study. It explores the contradictions between professed ethical standards and actual practices, highlighting the role of leadership and organizational culture in fostering or undermining ethical conduct. The essay then transitions to an analysis of ethical theories, including Aristotle's virtue ethics, consequentialism, and non-consequentialism, providing a framework for evaluating moral decision-making in business contexts. The essay further scrutinizes Kellogg's Customer Social Responsibility statement, questioning its sincerity through an assessment of its product offerings and their impact on public health. Drawing on Kantian theory, the essay interprets CSR and its implications for stakeholder relations. Finally, it explores fair trade practices, their benefits for small producers, and the challenges faced in their implementation, offering insights into the broader context of global corporate responsibility and the need for ethical business practices. The paper concludes by emphasizing the importance of responsible corporate behavior and the need for businesses to contribute to the global community, addressing issues like food security and fostering sustainable business models.

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BUSINESS ETHICS
1. The initial phase of the twenty first century has experienced a large number of
organizational failures because of wrong ethical practices. According to Sims and
Brinkmann lack of attention in organizational culture to ethical practice leads to
organizational collapse and corruption. The Enron scandal is a significant example of
organizational failure because of ethical misconducts in accounting and finance business
(Soltani 2014). Through this corporate scandal the management’s practice of pressuring
the employees for improving the economic profit.
Sims and Brinkmann showed how Enron’s ethics showed the contradiction between
promise and practice. It fore grounded the conflict between the organization’s ‘rotten
structure’ and ‘deceiving glossy’ (Sims and Brinkmann 2003). The auditor of Enron
Arthur Andersen engaged in unethical practice by misrepresenting the financial
statement. Enron kept hidden their financial problems from its investors and stakeholders
(Giannetti and Wang 2016). The top management of Enron developed an organizational
culture within the company that valued the bottom line profits above the right ethical
practice. The leaders’ reaction to the crisis also brings the organizational value to the
surface. The leaders started pointing and blaming each other. The accusations the
leadership was receiving initially the deliberately overlooked it but after the accusations
started coming to the surface they applied different strategies. The organization
strategically fired everyone who started blaming the management’s wrong practice before
they officially announced it. The employees were forced by the leaders to stretch the
ethical limitation as further as possible to achieve the next big financial target.

BUSINESS ETHICS
2. According to Aristotle if we obtain good habits we will be able to regulate our emotion
and reason in a better way (Yu 2013). This will help us to take right moral decisions even
in the difficult situations. In the critical thinking individual characteristic contribute
significantly. The ultimate goal of happiness could be achieved if we build up virtuous
character. He focused more on finding the mean than the moral virtue in order to cultivate
a virtuous character. We have to act honestly in the right way at the right time. We must
have to avoid extreme emotions and actions to be virtuous. To develop ourselves as the
ethically virtuous human beings we have to cultivate human virtues ‘not too little or not
too much’ (YouTube 2012).
In the consequentialsit school of virtue the morality is judged by the consequences
(Portmore 2016). If the consequence results in positive way then it is considered to be
ethically right but if it results negatively it is morally wrong. In the practice of Non-
consequestialism the reasons are valued not the results. The intentions decide the ethical
quality. The responsibility to do the right things drives us to engage in right ethical
practice. Therefore both are focused on judging the actions in consequestialist and non-
consequestialist theory but Artistotle’s virtue ethics judges the character.
3. The Customer Social Responsibility statement by Kellogg does not appear sincere. After
examining the various issues it is evident that the company is superficially trying to
convince the stakeholders that they highly value socially responsible service. Instead it
has been found that they are engaged in irresponsible business and customer misguiding.
The company has claimed to invest their money for improving public health by
producing nutritious food products (Kelloggcompany.com 2017). The British Food

BUSINESS ETHICS
Commission’s investigation found that their Coco Pops bar is harmful for health as it
contains high sugar and fat. Another product of the company the LCM bar also lack
dietary fibre and carries high amount of saturated fat. These products highlight the
contradiction between Kellogg’s big promise and their practice. The unethical behavior
of the company has come to the surface by their production of harmful food. The Kantian
theory can be interpreted in the business CSR in various ways. One aspect would be
acting by the universal laws. The theory encourages treating everyone as human beings
and not just as a mean to achieve something. The organizations should treat stakeholders
as persons, not like Kellogg’s treatment towards it stakeholders. They are making false
promises just to get more profit. The Kantian theory of subject’s acting as a member of
ideal kingdom can be interpreted as the organization’s act as an ethically strong
community (Michaelson et al. 2014). The CSR method by Kellog does not support the
customer’s profit as they only want to ensure their own profit by producing potentially
harmful products for public health.
4. The trade fair is also potential for the small producers for long term benefit. In a fair trade
system helps them to nurture leadership and grow strongly bonded communities (Brett
2017). In the direct trade a single farmer gets benefitted but in the trade fair they gain
profit collectively. Therefore the trade fair strengthens the farmer community. They
increase their business by sharing knowledge and participating in the decision making.
However there are different views on the topic as well. In the developing countries the
market share is so small that it fails to influence the common living standards. The
organizations do not engage in effective communication outside the corporations. Also

BUSINESS ETHICS
though trade fair cuts off the middle man but the organizations cannot effectively transfer
the full amount the producers.
The organizations from the developed countries should engage more in improving the system.
The corporations should allow average priced products in their markets by large quantities. Most
private corporations in the world covers global economy’s three quarters, so there contribution to
the global community is significant. The organizations must engage in responsible business and
economic development. The organizations from the developed countries must address the issues
such as food security. The corporations donating money also proves their interest to improve the
global community. This not only helps its reputation to the global market bust also to its
stakeholders. The corporations should participate more responsibly in order to break the
monopoly of certain organizations and enhance the global corporate economy. The need of the
global community must be addressed. The organizations should encourage sharing their values,
working collaboratively and by strengthening the global community developing a sustainable
business.

BUSINESS ETHICS
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