An Analysis of the Utilitarian Approach in Business Ethics

This essay delves into the utilitarian approach to business ethics, examining the critical distinction between actions and ethical responsibilities. It explores the significance of ethics and morality, defining these concepts and their impact on organizational culture and employee behavior. The essay discusses the utilitarian approach's core principle of maximizing happiness, providing examples like the Ford Pinto case to illustrate its application in business decision-making. It also highlights the importance of ethical considerations in leadership and employee conduct, emphasizing how these factors influence a company's reputation and productivity. The essay contrasts utilitarianism with other ethical frameworks and underscores the role of ethical codes in guiding actions within business contexts, offering a comprehensive understanding of the approach's influence in the professional world.

Running head: UTILITARIAN APPROACH TO BUSINESS ETHICS
Utilitarian Approach to Business Ethics
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Introduction
There is a huge difference between what people can do and what is the right thing to
do. Weiss (2014) had stated that, one should not let their moral sense to get in the way of
doing the right thing. As man is a social animal, several contemporary sociologists have said
that even though there are certain rules of nature for controlling the behavior of men, man
himself has derived some principles for governing the individualistic and the group
behaviors. These rules may also differ across different time and cultures, considering the
behavioral standards. However, the primary objective of these rules is to maintain the mutual
peace and existence in a specific social group or community. These rules also define the
protection and security of the social groups, where the behavioral standards contribute to the
survival strategy of the specific community and its members (Crane and Matten 2016). The
sociologists have named these behavioral standards as the ethics. However, many have also
argued that humans already have the biological capability of making the ethical judgments as
they have the ability of examining all the actions whether they are evil or good. In terms of
the professional world, other than the organizational culture, the ideologies of the other
employees and the leaders can have a great impact on the ethical orientation of individuals. In
addition to that, the organizations, regardless of their size, tend to monitor and evaluate its
employees through a fixed set of ethical standards (DesJardins and McCall 2014). Other than
the internal code of conduct, the other external entities such as legal and professional bodies,
public interest groups, government can also have a great impact on the behavioral norms of
the organization (Trevino and Nelson 2016). Along with that, within the global context, the
international organizations such as United Nations and the other organizations also influence
the ethical code of conduct of the organizations. Within these ethical conducts, there are
different approaches which have contributed to the business world. This essay will address

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the significance of ethics and morality and focus on the Utilitarian Approach within the
business world.
Significance of Ethics
The meaning and significance of ethics is quite difficult to pen it down, as most of the
individuals consider it to be an unstable entity. Several individuals tend to consider ethics to
be their feelings, however ethical considerations are not something which is evidently not
following the feelings or emotions. If a person is considering his or her feelings, it cannot be
considered as ethics; rather blindly following someone’s feelings can also make one unethical
at some situations. In addition to that, one should also not confine or confuse ethics with
religion (Shaw 2016). This would mean that the ethical considerations are only applied to the
religious individuals. However, in reality the scenario is not exactly like that. The ethical
behavior and consideration are applied as much to the saints as it is to the atheists. Religion
may contribute in setting higher ethical standards and it can also motivate the individuals to
commence ethical behavior, but it is definitely not confined to a specific group of people, but
to all (Letwin et al. 2016).
Being ethical can also not be equated as being legal. Even if the legal framework
incorporates the ethical standards, there can be many situations where the law can deviate
from the ethical behavior. For example, in USA there were slavery laws in the Pre-Civil war
times, before getting the independence apartheid laws in South Africa, which can indicate
that how laws can deviate from the ethical behavior. Therefore it can also be said that being
ethical is not something which the society accepts at every situation. In the past, the slavery
laws were something that the society had accepted, however, it can be considered as ethical
(Hoffman, Frederick and Schwartz 2014). In any group or society, mostly the standard
behavior is accepted to be right; however the standard behavior can always deviate from the

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ethical behavior. There are several instances that indicate that the whole society can be
ethically corrupted (May, Luth and Schwoerer 2014). The Nazi Germany is a burning
example of the morally and ethically corrupted society.
Within the business organization, there are several ethical implications that is
considered as the values and principles of the individual which tend to govern all the
decisions and activities. This ethical philosophy of the organization is utilized for conducting
the business; therefore it can affect e productivity and reputation of the business. There are
two major kinds of ethical behavior within the organization, leadership ethics and the
employee ethics. The leadership ethics is the one which the leaders apply for managing the
employees; therefore it has a profound influence on the loyalty and morale of the workers.
The employees also utilize ethics for adhering to the rules and policies of the employees for
meeting the objectives and goals of the organization. Other than these, the employees also
require to adhere to the ethical code of conduct according to every organizational culture.
Meaning of Morality
Morality is also closely tied with ethical behavior. It can be described as the fixed
standard which the group of people or the individual considers regarding wrong or right, or
evil or bad. The moral character or the moral quality is decided according to the ethical
principle or the ethical standard of conduct. However, the moral quality of an individual
cannot be imposed from outside, rather this quality is an innate one which can also be
considered as the unconscious one. There is always a basic urge of connecting if one can
bond with other’s moral behavior. As stated by May, Luth and Schwoerer (2014) moral
philosophy is something which is related to our regular everyday entities. The famous
philosopher Immanuel Kant has made the division the entire world between the metaphysical
and real worlds where he consciously places God later. It has also been said that the moral

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qualities of the every individual force in living in harmony with all the unconscious entities
which is mostly considered to be the highest form of moral behavior. Morality is entirely
individual because it has been seen that the morality of a certain group always decreases
when the size of the group increases (Kahane et al 2015). Morality is also the informal public
procedure which can be applied to all the governing behavior, rational people, therefore it
affects others.
The goal of moral behavior is to reduce the harm or the evil ones. It can also be said
that morality is a set of philosophical belied or the concepts which can help the individual to
determine whether their actions are justified or not. Most of the times these ethical beliefs and
concepts are misunderstood and over-generalized within the cultural group, therefore it serves
for regulating the ethical behavior of the members of the group (Ferrero and Sison 2014). The
confirmation of such ethical codification is considered as morality. Therefore it is highly
possible that the group tend to depend on the prevalent conformity to these ethical codes for
continuing the existence. Therefore, morality can also be called as the systemic procedure
that tends to incorporate the significant features which is known to everyone (Kahane et al
2015). The moral codifications tend to prohibit, discourage, require, encourage and allow the
individual in different situations. Morality is also applied to various rational procedures,
therefore it is also considered as the universal guide for ethical behavior. However, morality
is entirely an informal system which does not have any decision process or any authority to
judge the situation. Therefore there is no such authority that can be capable of providing all
the answers for moral questions (Arenas and Rodrigo 2016). For example, there are several
situations within a business organization where the managers have to decide among potential
options. It is highly possible that sometimes, they do not adhere the ethical code of conduct,
however it is always expected that they would stick to the predetermined ethical code of
conduct (Duska 2014). Also the most significant example of moral question that rises in the

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contemporary world is the question of abortion. There have been constant disagreements on
this moral issue, where the political and legal system of the countries has also been involved.
However, in most of the countries, medical abortion has been allowed depending on the
medical condition of mother. The Utilitarian also talks about the production of the great good
as the moral goal (May, Luth and Schwoerer 2014). However they mostly include reducing
the harm as an important entity. This is the primary reason that their instances include the
avoidance and prevention of the harmful deeds is that they consider the greatest good to be
the ultimate moral objective (Saez and Stantcheva 2016). Also, when a person is performing
or failing to perform the morally justified actions, it is mostly considered that he or she
deserves a specific type of response. Therefore moral responsibility is ascribed to certain
people for performing well or lessening the harm for some people.
Utilitarian Approach
The Utilitarian approach is one of the traditional historical approach that began in
classical Greece and continued to the modern times. The word Utilitarianism finds it root
back in the works of economists William Stanley Jevons and Jeremy Bentham from London.
The core thesis of Utilitarian Approach states that the actions are only right when their main
job is to maximize the happiness. Therefore, when one is deliberating his or her actions, he or
she should choose the actions which will contribute in increasing the amount of happiness.
For instance, if a teacher is trying to decide whether he has to go to his class and teach
mathematics to his students or stay at home and spend the entire day watching movies and
having fun, he has to apply different utility forecasts for determining what exactly to do
(Kahane et al 2015). If the stays at home, he may have a lot of fun at home and enjoy his off
day, where on the other hand the students may also be relieved that they do not have to attend
a class (Saez and Stantcheva 2016). However, if the teacher goes to the class, he can teach the

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subject and have fun with all the students, where the students will also learn something. If
this does not happen they may end up considering mathematics as a boring subject.
Therefore, what is right for the teacher, going to the class or staying home, will be directed by
the amount of happiness his actions will produce. Moreover, this determination will also be
affected by the empirical considerations. Utilitarianism also attempts in predicting the right
actions as it provides a scientific approach to the ethical consideration. The fact that one has
to measure the amount of happiness his or her action would produce, gives a scientific base to
the entire approach.
The concept of utilitarianism has also been applied in the business world. It came
from the incident of Ford’s condition within the automobile industry. In early 60’s, Ford was
facing heavy competition from the other Japanese companies who had entered the automobile
market with more compact and cars that are fuel efficient. At that point of the president of the
organization was badly trying to recover the share of Ford in the automobile market.
Therefore he had came up with the strategy of quickly manufacturing, designing and
marketing the car named ‘Pinto’ whose cost was even less than $2000 and also weighed not
more than 2000 pounds. After one of the early model of Pinto was tested, the organization
came to realize that the rear is struck at 20 miles per hour and the gas tank is being ruptured,
therefore the gas can spray out to the passenger compartment. This may cause a huge
accident. However, the management of the Ford decided to go for this car for few reasons.
Firstly, their design has met all the government legislations and the legal formalities.
Secondly, the managers also felt that the car is better and safer than other cars which were
being produced at that point of time. Thirdly, after an internal cost benefit study, the
management has realized that the further modification of the car would not be balanced by
the benefits. This study had indicated that the further modification of the car would cost
around $11 per car which will cost around $137 million for the company. However, the data

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also showed that this modification can save around 180 burn injuries or burn deaths. It would
also save the cost of around 2100 vehicles. Therefore, the data also indicated that the cost of
$137 million can save and prevent the losses of the consumers which have valued around
&49.15 million. Therefore, this study had argues that spending $137 million of the money
would not be necessary for saving around $49.15 million. However, after the model came to
the market, there had been continuous accidents followed by dying of around 60 people and
many got injured. Therefore the company had to fade out the model soon from the market.
This entire incident can be judged from the utilitarianism point of view which holds
the policies and actions which are to be viewed by the cost and benefit imposed on the
society. This approach considers that any right policy or right action can only provide great
benefits or the low net costs. With the term ‘benefit’, both the non monitory and monitory
benefits are included such as happiness, income, satisfaction etc. On the other hand, cost can
also include the non monitory and monitory costs including the loss of money,
dissatisfaction, unhappiness etc (Lee and Gino 2015). In this situation, the Ford management
had only considered and estimated the monitory cost, however, they did not consider the non
monitory benefits. The Utilitarian principle does not believe that one can measure the
quantity of such non monitory costs and benefits. This approach makes the effort in proving
the answer of the pragmatic question that what one should do in such situations. The
approach answers that one should do whatever can give the best consequences in future
(Boutilier et al. 2015). Utilitarianism also states that the action is only right when it has
produced the utility for most of the people who are being affected by the action.
Utilitarianism also considers that the final action is the only one which is the right one and
whose benefits are greatly relative to the total benefits of all the potential alternatives.
Utilitarianism also considers both the future and the immediate benefits and costs of
the taken action. This value has also been influential within the economic field. Therefore,

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the economists also argue that the economic behavior can be elucidated after the assumption
that the human beings always tend to increase their utility therefore the utility of the products
are entirely measures by the price that people are eager to pay them. Hobolt and de Vries
(2016) have shown that within a competitive market, the concept of utilitarianism is closely
tied with the concept of fairness and justice. There are few other concepts that are related to
the notion of utilitarianism, such as,
Notion of Justice:
In the modern world, many people, ask for justice and peace from different parts of
the world, who, surprisingly are ready to destroy the societies with the help of violence. Most
of the people tend to think of justice as something which is attained by the financial
rearrangements (Boutilier et al. 2015). However many think that action not be justified. It
should also be noted that the justice can only be treat as the glue that can hold the civil
nations and the civilized beings together.
Fairness:
This concept is the agreement with the fixed rules or the standards along with the
capability of making the judgments that are entirely free from all the dishonesty and
discrimination. Within the organization, the disputes amongst the individuals are highly
possible which can be related to the fair judgments. Therefore, one should remember that
both the fairness and justice are comparative (Crane and Matten 2016). This is also concerned
with the burdens, benefits that the individuals received other than the laws and rules.
Moreover, it should also be noted that the standard justice is not really considered to be
significant than the utilitarian implications, even though, they should consider that the
concept of standard justice should never be overriding the individual moral rights (Trevino
and Nelson 2016).

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Justice Principles
Aristotle has defined the principles of justice which denotes that the “equals should be
treated equally and unequal unequally”. Within the contemporary organizations, the
principles have defined as “Individuals should be treated the same, unless they differ in ways
that are relevant to the situation in which they are involved.” (Hobolt and de Vries 2016).
Therefore if the employees are working at a same organization and at similar designation,
they should get the similar wages as the wage should not be changed depending on their sex
or race. Therefore, there are several criteria that can contribute in treating people in a
different way. Within the professional field, most of the ties, the treatment of the individuals
are hold based in hiss or hers sex, religious preferences, race and several others. However, it
is never fair and cannot be controlled.
Conclusion
In conclusion, it can be said the HR managers within the organization is mostly
operate with the utilitarian plan. There are generally three kinds of directors in the director
board, such as the academic director, administrative director and the other one who involves
both the responsibilities, The business ethics have been very much helpful for the activities,
situations and the decisions of the organization where the issues are mostly right if it is
considered from the naturally moral point of view. There are levels of business situations
which can be addressed through the utilitarian approach.

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