Business Ethics Analysis: Volkswagen's and Primark's Operations Report

This report delves into the realm of business ethics, using Volkswagen and Primark as case studies. It begins by examining ethical theories, such as deontological and utilitarian approaches, and applies them to Volkswagen's unethical behavior in the diesel deception scandal. The report analyzes the implications of these actions on the company's operations, brand image, and stakeholders. Subsequently, the focus shifts to Primark, exploring its role as a moral agent, its ethical code of conduct, and mechanisms for employee involvement and empowerment. The report concludes with a discussion on Primark's current ethical issues and proposes strategies for ethical improvements, including a new ethical code. The analysis covers legal compliance, business practices, individual ethical responsibilities, and the impact of ethical practices on company objectives and stakeholders, offering a comprehensive overview of ethical considerations in business operations.

BUSINESS ETHICS

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Theories of ethical approaches..............................................................................................1
1.2 Comparison of absolute and relative theories.......................................................................2
1.3 Ethical issues affecting the operations of Volkswagen.........................................................2
TASK 2............................................................................................................................................3
2.1 Ethical consideration affecting the objectives of Volkswagen.............................................3
2.2 Implications of ethical practices for Volkswagen and stakeholders ....................................4
TASK 3............................................................................................................................................5
3.1 Primark acting as a moral agent............................................................................................5
3.2 Mechanism of achieving employee involvement and empowerment...................................6
TASK 4............................................................................................................................................7
4.1 Investigation of current ethical issues of Primark.................................................................7
4.2 Improvement in the ethics of Primark...................................................................................7
4.3 New ethical code of Primark.................................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Ethical behaviour is the principle element of success for every organization. Ethics means
doing what is morally right. It is the social responsibility of every company to follow an ethical
code of conduct in order to satisfy the needs of society and stakeholder. The report discusses
about the unethical behaviour of Volkswagen, where the company got involved in diesel
deception hoax. Further, it discusses various problems faced by the company in terms of brand
image, losses and court cases. In the second part of the report Primark has been chosen as a
registered company. It discusses about the ethical behaviour the company follows. Moreover,
new ethical code has been designed for Primark. Also, various mechanism of achieving
employee involvement and empowerment has also been discussed in the report.
TASK 1
1.1 Theories of ethical approaches
Ethical theories plays an important role in decision making process of an organization.
Each theory emphasizes on different decision making rules. However, the four major principles
that every decision maker should follow are: they should do what is right and good, least harm to
people, respect for autonomy and justice to people. There are various theories of ethical
approaches which are given as below:
 Deontological Theory: According to this theory, the organization should follow all the
duties when a company is going to take any decision. The decision should also follow the
duties of other individual and this is what we call as ethically correct. Volkswagen
manipulated the data of emission which caused various respiratory diseases and
aggravated heart diseases among people (Ma’Ayan and Carmeli, 2016). It shows that the
company could not take care of its consumers while fulfilling its own objective.
Volkswagen was not able to take rational decision which lead to unethical practice. The
decision of data manipulation of emission may have been beneficial for Volkswagen in
short run, but it misleads the public causing various health issues to them. It also affected
the business in long run where company lost its revenue, brand image and lost its loyal
customers.
 Utilitarian: It is a teleological theory, according to Utilitarian, the morality and
immorality of an act lies in its consequences. Before taking any action it is important to
decide the pros and cons of act. If the activity leads to good results, then there are no
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problems in manipulation with the ethics. However, if the action may cause harm to
anybody, the malpractice should not be performed by the organization. The action can be
right only if the end result of the action is right (Forlizzi and et.al., 2016). Volkswagen
manipulated the data of emission without considering the fact that it can cause harm to
the health of people. The end result led to increase various diseases which made the
action unethical and unacceptable.
1.2 Comparison of absolute and relative theories
Absolute theories is universal code followed by all, equally the changes in the situation
do not make any change in the absolute moral code. However, relative theories tend to change
the moral standard based on a different circumstance. It may be ethically correct to do something
in a certain situation (Hickman, Powell, Piquero and Greene, 2016). However, it may be
unethical in any other circumstances. Based on the two theories discussed above, deontological
theory is an absolute theory where a universal code of conduct is designed and that cannot be
changed in different circumstances. Utilitarian theory is a relative theory where changes in the
code of conduct can be made based on the prevailing circumstances.
According to the case of Volkswagen relative theory was applied by the company where
data of emission was manipulated in order to generate higher revenues. Hampering the moral
conduct lead to affect the brand image of Volkswagen. According to United States
Environmental Protection Agency (US EPA), the emission from the diesel engine should not be
more that 40%. This practice need to be performed by every auto mobile company. Volkswagen
should use this moral act as an absolute theory. If discrepancy is found in this data, it may lead to
conduct of unethical behaviour which is further punishable by law. It is the corporate social
responsibility of every company to work in an ethical code of conduct to protect the people or
resources attached to it.
1.3 Ethical issues affecting the operations of Volkswagen
There are various restrictions made by various departments of the country in order to
maintain ethical code of conduct (Kraft-Todd and Rand, 2016). In case of auto mobile industry
various restriction. A company's license can be cancelled if the written rules are not followed. A
company needs to take care of pollution and maintain the carbon emission from the vehicle up to
a certain limit. It also needs to make use of the technological devices that help to reduce
pollution, which can affect the health of stakeholders.
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Based on the given case scenario of Volkswagen, following were the disadvantages faced
by the company on its operational activities due to involvement in unethical code of conduct.
 Legal compliance: Due to involvement in manipulation of emission data, the company
was accused of misleading federal regulator. The US Department of Justice on behalf of
United States Environmental Protection Agency (US EPA) sued the company for
manufacturing and installing devices with misleading data of emission in various diesel
vehicles. EPA also threatened Volkswagen that environmental certification will not be
issued to their 2016 models. The company was also harshly scrutinized by Environmental
Protection Agency. Business practice: After this incident, there was a great impact on the business practices
of Volkswagen. Being a global brand, it affected the brand image of the company in all
over the world. Its credibility was affected after this incident which reduces the revenue
of the company and customer base was also get affected. It affected the business of
Volkswagen to a great extent.
 Individual ethical responsibilities: It is the duty of every individual to do what is morally
correct. From small business to big companies, it is important to adhere to all the ethical
responsibilities (Kalshoven, van Dijk and Boon, 2016). In case of Volkswagen, the extra
carbon emission from the vehicles affected the lives of people causing various diseases
such as bronchitis, emphysema that led to increase in the premature deaths. Ignoring
health and safety standards is considered as unethical that should not be practised by the
company.
TASK 2
2.1 Ethical consideration affecting the objectives of Volkswagen
Every company is required to follow a certain code of conduct when it comes to ethics. A
certain laid down rules are stated by the companies in order to maintain the corporate social
responsibility towards the society. It helps to impart true and authentic knowledge and prevent
errors. Every company aims to have high revenues, greater profit margins and grow in a certain
field. However, with these objectives it is important that it should not hamper the morals and
ethics of the company (Rand, 2016). Selling a defected product may raise the revenue up to a
certain period of time, but it may affect the brand image of the company in long run. One of the
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the stakeholders of the company are consumers, it is important to protect the rights of the
consumer and deliver them best.
As per the case, Volkswagen's lost its brand image up to a certain extent. In order to
achieve the objective of becoming successful, fascinating and sustainable auto mobile
manufacture, the company need to consider all the ethical issues. Due to unethical code of
conduct, the company has to bring back the loyalty among customers (Rus, 2016). It is important
to make the customers realize that the company is following all the conditions ethically. There is
also a pressure from the society that whether it will able to bring that sustainability back in its
business. European commission stringent the rules for emission and warned many other
companies to strictly follow the limit. The major reason is to control pollution in UK. Pressure
from European commission has made the functioning of Volkswagen even more difficult.
2.2 Implications of ethical practices for Volkswagen and stakeholders
When a company operates ethically, it increases the goodwill of a business which
ultimately generate higher revenues. In order to improve its brand image, Volkswagen can
consider to operate ethically. It will help to gain back the goodwill it has lost during diesel
deception hoax and will also help to generate higher revenues. It will develop confidence among
the stakeholders.
Volkswagen after the diesel deception hoax, lost its brand image in the market. A civil
suit was filed by U.S. department of justice, where fine of $45 billion was imposed on
Volkswagen. The emitted nitrogen oxide pollutants up to 40 times of what is allowed in US. The
Volkswagen market of various countries such as UK, Italy, South Korea, Canada and Germany
was hit badly. Diesel sell got slow at that period in US (Łychmus, 2016). Sales of various
companies such as, Toyota, BMW was hampered due to this hoax.
It is important to be morally correct for the creatures. It helps the company to get
competitive advantage over others. It increases the trust of the customers and also increases the
brand loyalty. The company is even able to fulfil social responsibilities. However, in some cases,
working ethically may not help the company to generate revenues as the primary responsibility
of any organization is to make money. When a business is profitable, it helps in increasing the
rewards of stakeholders. Repayment to various creditors becomes easy and business is able to
achieve its objectives as well (Kiffin-Petersen, 2016). Volkswagen has to fulfil the corporate
objective without hampering its social responsibilities. It is important that ethics are considered
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by each individual in the organization and practice a common goal to achieve organizational
objectives. Companies do not focus on ethical activities as it has a correlation with financial
performance of the business.
TASK 3
3.1 Primark acting as a moral agent
Moral agent is an ability of an individual to make judgement based on the notion of what
is right and what is wrong. Moral agent enjoys the responsibility of decision making. In order to
be a moral agent, he should be aware of all the moral principle and use them for decision
making. Moral agent must be self conscious, able to memorize, ability of reasoning and must
have the abilities to make judgement on behalf of the organization.
Primark has been identified as a moral agent where human rights are considered to be the
top priority of the company. It has been able to put good working conditions towards the
employees in its factories. It has been able to provide respect to the human rights of employees.
Due to its moral agent, the company shares good image with its suppliers as well as the
employees. The working culture of Primark has been able to set standards in UK.
Primark has been able to maintain employee and workplace relationship. A certain code
of conduct is followed by the company where employees are given freedom to choose their job.
Employees help each other, which helps to develop inter personal relationship among the
employees. Also, it motivates them to go out of their job description to help each other
(Murnighan, 2016). When strong ethical guidelines are followed by Primark, it make the
employees clear about their job and responsibilities.
Various activities are conducted by the company in order to remain ethical. Some of them
are:
 There is no compulsory labour where labours are bonded, trafficked or prisoned.
 Employees are free to make or join trade unions.
 No recruitment of child labour.
 Children below 18 are not involved in any hazardous activities
 No discrimination among workers is practices
 Employees are paid with wages and are given paid holidays also.
 Quality products are offered to the consumers.
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 various customer support services are rendered to bring the customers to satisfaction
level.
3.2 Mechanism of achieving employee involvement and empowerment
Employee involvement refers to involving the employees in various activities which
ultimately contributes to continuous improvement and ongoing success of the organization.
According to employee involvement, they are asked to apply their own ideas, expertise and work
towards solving a particular issue. By this method, employees feel associated with the
organization.
Employee empowerment refers to give certain amount of authority and responsibilities in
the hands of the employees. They are also involved in decision making of the organization to
some extent at the lower level where unique view of the issue is faced at a certain level. When
employees are allowed to participate then it allow greater autonomy to employees and
representatives from the trade unions.
Numerous activities are performed by Primark in order to involve and empower
employees. Some of them are;
 Employees are encouraged to participate by asking them for feedback where they can
mention the obstacles faced by them at workplace. These suggestions are reviewed on
monthly basis and corrective actions are taken based on the issue (Kaptein, 2017).
 Decision making authority is given to the skilled employees of Primark. It helps in quick
decision making and management can focus on various other important issues of the
company.
 A representative of teams are asked to put all the problems in front of the management.
Primark is able to understand whether the employees are happy with the services which
are being provided by the management to them.
 Primark expands the job content and give decision making authority to the employees up
to a certain level.
 It ask for the opinion from the employees about the subject matter in order to collect their
views and to understand the other side of the matter. It helps the employees to stay
motivated and they feel associated with the organisation.
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TASK 4
4.1 Investigation of current ethical issues of Primark
There are various unethical issues involved in the companies these days. Some of them are:
 Globalization has brought competition in almost every country. Various substitutes are
available in terms of brans, companies, products etc. When the companies do not perform
well, the consumers shift to some other company to satisfy their needs. It increase in the
incidents of window dressing of financial accounts, forged revenue etc
 Being in a competitive environment, companies try to improve their profits. In order to
achieve this, they tend to involve in unethical activities.
 Corruption in the environment don't allow a company to flourish. In order to be safe,
company tend to involve in various bribery activities (Wasserman, 2017).
 Companies also involve in child labour activities, hamper the environment by emitting
harmful gases during production and ignoring the corporate social responsibility towards
the environment.
The above mentioned ethical issues affect the functioning of Primark to a great extent.
Globalization and various competitors available in the market affects the revenue and profits of
the company. Primark also have to save itself from corruption which act as a challenge for the
company. As Primark have various in house brands, it is involved in manufacturing as well. It
need to take care of harmful emission during manufacturing as well (Łychmus, 2016).
4.2 Improvement in the ethics of Primark
Primark has always been involved in ethical activities. There are various ways in which
the company can improve their ethics of operations without hampering the objective of the
business and also keeping the employer employee relationship intact. Few of them are mentioned
below:
 Attitude is a personal opinion towards any particular subject. In order to create positive
impact towards a situation, Primark can hire professionals to inculcate this type of
behaviour in the employees. It helps to improve ethical behaviour in the company
 Whistle blowers can also help Primark where if any misconduct in the behaviour is
found, these people inform it to the management (Wasserman, 2017). This helps to
maintain ethical behaviour in the company.
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 Primark should follow all the legal and regulatory compliances in order to stay away
from any type of unlawful conduct.
 The activities initiated by the company for sale and marketing should be ethical enough.
The tactics used for marketing a product should not mislead the consumers. The content
used during sales and marketing should be genuine.
 The company should have set rules where involvement in any kind of bribery can lead to
termination of the contract or is punishable.
4.3 New ethical code of Primark
Primark has been facing issues regarding its existing ethical code. Following is the new
ethical code for the company:
 Any code of conduct of the company should be directly related to the objectives of the
business. Primark should be able to achieve its vision, mission and objectives in the end.
 Decentralization can be a helpful technique where decision making can be divided among
the subordinates as well (Rus, 2016). It will help the management to focus on the
important issues of Primark.
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 Transparency in the remuneration system will help the employees to get their share from
the company in an ethical manner.
 Sales and marketing strategies sshould be made in such a way that actual content is
shared with the potential customers rather than misleading them to increase sales.
 Primark should not hire child labour and workers below the age of 16 should not be
involved in hazardous activities.
 The company need to develop competitive spirit among the employees without
hampering the ethical code of the business in order to compete with globalization.
CONCLUSION
From the above report it can be concluded that, it is important for a company to follow
ethical behaviour. It helps in the sustainability of the organisation as well as builds a brand image
in the society. It increases loyalty of the customer towards a company. According to the case of
Volkswagen it can be concluded that diesel deception hoax affected the company's brand image
up to a great extent. The company also lost its revenues, profit and customers. According to the
case of Primark it can be concluded that the company is involved in various ethical activities.
However, in order to cover the loopholes, new ethical code has been designed which suggests
various measures to promote ethical behaviour in the organisation.
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