Business Ethics Report: Kobe Steel Scandal, CSR, and Theories

This report provides a comprehensive analysis of business ethics, focusing on the Kobe Steel scandal as a case study. It begins with an introduction to business ethics, defining its role in organizational conduct and decision-making. The main body of the report is divided into three parts. Part 1 evaluates various approaches to sustainability and corporate social responsibility (CSR), utilizing the Triple Bottom Line (TBL) model and Carroll's CSR pyramid to assess the company's practices. Part 2 identifies applicable business ethics theories, differentiating between normative and descriptive business ethics and their relevance to the case. Part 3 examines stakeholder viewpoints on business behavior, considering the perspectives of owners, employees, investors, customers, suppliers, and the government. The report concludes by summarizing the key findings and implications of the ethical issues presented in the Kobe Steel scandal, emphasizing the importance of ethical conduct for business success and stakeholder trust. The analysis highlights the ethical failures within Kobe Steel, and their impact on various stakeholders. The report emphasizes the need for ethical frameworks and regulations to ensure responsible business practices.

Business ethics

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY ..................................................................................................................................1
PART 1 ...........................................................................................................................................1
Evaluate various approaches of sustainability and corporate social responsibility of company.
................................................................................................................................................1
PART 2............................................................................................................................................4
Identify the applicable business ethics theories. ....................................................................4
PART 3............................................................................................................................................5
Stakeholder viewpoint on business behaviour.......................................................................5
Various benefits of ethics in business at an academic level and managerial implications.....6
CONCLUSION................................................................................................................................7
REFERENCES ...............................................................................................................................9

INTRODUCTION
This report helps in understanding the concept of ethics in business. It refers to an
contemporary standard or various set of values which influence the action and behaviour of an
individual working in an organisation and actions of organisation also. Business ethics is related
to the code of conduct of an individual and organisation. Ethics in business includes the study of
different practices and polices of an organisation related to various potential controversial issues.
It includes various issues like trading inside an organisation, discrimination, corporate social and
fiduciary responsibility of an organisation and so on. This report is based on a case study of
Kobe steel scandal. Japan economy has a longest GDP growth since 2001 in the third quarter of
2017 but there are some biggest companies of Japan because of them there is a question on
country standing as manufacturing powerhouse. This report include stakeholders viewpoint on
behaviour of business and various beneficial points related to ethics in business at an academic
level & managerial implication. Other than this it includes normative and descriptive business
ethics theory. This report includes various approach of sustainability of resources and corporate
social responsibility of an organisation.
MAIN BODY
PART 1
Evaluate various approaches of sustainability and corporate social responsibility of company.
In relevance of selected case study various approaches of sustainability and corporate
social responsibility of an organisation are discuss below:
Sustainability- It means fulfils the need and requirement of current population without
compromising the need and quality of future generation people. In terms of a business,
sustainability is defines as managing the TBL. It is a process through which a business or can
managing their risk related to financial, social and environment and identify the avaliable
obligation and opportunities. Sustainability play an essential role in any business or organisation
for their growth and success. Various approaches of sustainability in context of case study are
discuss below with the help of TBL model of sustainability (Borda, 2018).
Triple bottom line- TBL is an framework of accounting which includes various important
approaches such as social, environmental and financial. This model helps organisation in
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evaluating their business performance in a boarder perspective to create more business value. Its
various important dimensions are mention below:
 Economic- In the TPL approach, economic it is not just the traditional corporate concept.
Economic capital under this approach will be measured in terms of total impact of
business on economic environment. If a business wants to achieve higher success they
needs to strengthens the economy. In context of case study, because of the scandal of
Kobe steel, Mitsubishi Material and Japan's corporate governance will affect the
economic growth (Cowton and et. al. 2019).
 Environmental- Triple bottom line approach to sustainability defines the impact of
business on environment. According to this approach the less amount of natural resources
are consumed by company will tends to higher growth and success for business. Business
needs to to effectively manage their environment bottom line in TPL primed for
managing and controlling its consumption of resources and their wastage. Measuring and
controlling environmental approaches are difficult and a time consuming process. In
context of case study it is analysed that
 Social- This bottom line helps an organisation in measuring their business profit through
human capital and also defines their position in society. A business will improve its
bottom line related to social factor with the help of involving corporate community and
implementing fair practices related to labour. In context of case study, Mitsubishi
materials, is provided fake data on auto and air plane parts affecting almost 274 clients.
Corporate social responsibility- It refers to a business activity which is self regulated
and its aim to contribute to societal goals of a philanthropic, charitable nature through supporting
volunteering or ethically- oriented practices. Corporate social responsibility play an essential role
in growth of a business. Now a days business are truing towards corporate social responsibility
for making a difference and building a positive brand image of company. In context of case
study Carroll pyramid model is discuss below:
According to this model the corporate social responsibility is divided into four
components that are economic, legal, ethical, discretionary.
 Economic responsibility- According to this responsibility of an organisation company
has to produce those products which fulfil the need of society or customers and help
company in achieving higher profit. Company have shareholder who has a expectation to
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earn higher interest on the amount they invest in business, while employees wants that
their job will be secure and they receive equal wages according to their performance.
Other than this customers have a expectation from company that they produce good
quality products at a reasonable price. Economic responsibility is the foundation of
pyramid on which the other layers are rest. In context of case study they needs to fulfil
economic responsibility in CSR by producing good quality products (Fine and Rush,
2018).
 Legal responsibility- According to this corporate social responsibility of company, it
require that company perform its business operations and functions under rules and
regulation. The rules are regulations are consisting the various laws that represent society
view of codified ethics. These law helps an organisation in conducting their business
practice in a fair manner. In context of Kobe Steel, it is evaluated that they needs to
operating its business activities by meeting legal obligations and supplying goods and
services that meet the minimum legal requirement.
 Ethical responsibility- This responsibility of businesses will go beyond society
expectations law and regulations. Every time society wants from business that it conducts
and manage its business in an ethical manner. In context of Kobe steel scandal company
do unethical work which will influence its image and growth. Company needs to fulfilled
this responsibility by identifying various new standards of ethics which will be adopted
by society. Company needs to acknowledging that their business integrity and ethical
behaviour will go beyond compliance with rules and regulations(Gentina and et. al.
2018).
 Philanthropic responsibility- This corporate social responsibility includes the voluntary
activities of businesses. It is not a type of literal responsibility but now a days society
wants that business are participate in such activity. This community give a impression on
public that it give something back to society. In context of Kobe Steel, they needs to fulfil
this responsibility through providing gifts, donations, volunteer work and so on.
From above discussion on sustainability and corporate social responsibility it is analysed
that company do unethical work which will influence its business growth and market. Company
needs to adopt Carroll pyramid model for better fulfilling social responsibility. Which helps
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them in performing business activities by formulating ethical rules and regulations. Which helps
them in maintain their good image.
PART 2
Identify the applicable business ethics theories.
Normative business ethics theory- It refers to the study of ethical action. In other terms
it helps an organisation in analysing how a people ought to act in terms of morality (Goodpaster
and et. al. 2021). Normative business ethics theory is concern with the concept of what is
morally right and wrong. The concept of normative business ethics is that how basic moral
standard is arrived and how the moral standards are justified. This theory is divided into two
parts which are teleological and deontological theory. Teleological ethics includes the goodness
and badness of action which can be determine through examining consequences of actions.
While deontological theory includes the goodness and badness of action which is determined
through examine the action itself.
Descriptive business ethics theory- This theory is also known as comparative ethics
which helps in understanding the views of people about moral beliefs. In other terms in defines
that what actually people think is right. The concept of descriptive theory involves moral values,
standards and behaviour. It refers to a type of empirical study which incorporate research in the
field of psychology, sociology, anthropology and history. From these studies it is analysed that
all culture and society have their moral standards which advocate certain type of action.
Descriptive ethics helps in analysing the similarities and differences between the various moral
practices of various society and helps in evaluating the standards behind these practices (Jackson
and et. al. 2020).
From above discussion on both the theories of business ethics it is evaluated that Kobe
steel company needs to formulate ethical rules and regulations for performing their business
activities. Which helps them in analysing which activity its good or which activity is bad.
Scandal done by company show that they perform unethical activities which is not good for
society as well as company. So they needs to apply nominative business ethics theory.
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PART 3
Stakeholder viewpoint on business behaviour
Stakeholders refers to the various parties which are interested in a company and also
affected by activities of business. The concept of stakeholder is first used in 1963 internal
memorandum at the Stanford research institute. According to them stakeholder refers to those
group of people without whose support an organisation cannot achieve success and exist.
Stakeholders of an organisation is divided into two parts that is internal and external
stakeholders. Internal stakeholders refers to the group of people exist within an organisation. It
includes employee, owner and investors. While external stakeholders refers to a group of people
which are not directly related to a business but they are influenced by decisions of business. It
includes customers, suppliers, creditors, community, trade union, government. Various kind of
stakeholders of a company are discuss below:
 Owners- It refers to a person who is invest their idea and money in a business and
interested in maximizing the profit the business makes. In context of case study, the
owner of company have a perspective that they did wrong but they realize their mistake
and also say sorry to its shareholder and formulate ethical riles and regulation so that this
type of activities are not conducted again. Their owner have a mistake that it provide
wrong data which will impact its business image (Karimi, 2020).
 Employees- They have a direct stake in the company as they want to earn high wages
and keep their job. Along with it they want to earn various reward and benefits from
company. Depend on the nature of an organisation workers working in an organisation
also want health and safety measures from organisation. Employee of Kobe steel
company are also guilty because they do not perform the data check if they timely check
the data company can take correct action at time.
 Investor- It includes both shareholders and debt-holders. Shareholders refers to those
people who invest their money in an organisation and want higher return on their
investment in business. Investors are mainly concerned with the concept of shareholders
value. Investors have a positive perspective towards company and they think that its not
the mistake of company because they earn higher return on their investment.
 Customers- These stakeholders of a business wants to consume high quality products at
a reasonable price. Customers play an essential role as a stakeholder in any organisation.
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It influence the cost and quality of product produce by an organisation. The customers of
those companies, because they could be getting falsified transportation that could be a
safety hazard (Lee, and et. al. 2018).
 Supplier- It refers to an individual or group of people who sell goods or services or raw
material to business and rely on it for revenue generation and on-going income. In many
organisation their suppliers has a expectation related to their health and safety because
they are directly connected with organisation.
 Government- It is also consider as an important stakeholder of an business. Government
wants that a business timely pay taxes, employee more and more people, follow all rules
and regulations and truthfully submit its financial condition or report. Company help
government by contributing in gross domestic product (Miasoid, 2020).
From above discussion it is analysed that because of Kobe steel scandal people around it
are affected most. The stakeholders relay have a negative impact on this because the company
has around 112 years and reputation of company is at stake, employees and their family relies on
this income to survive. If because of this scandal the company was shut down everyone will
loose everything.
Various benefits of ethics in business at an academic level and managerial implications
It refers to an contemporary organisational standard or set of values which will influence
and govern the functions of business and behaviour of an individual within an business
organisation (Pasricha, and et. al. 2018). Business ethics play an essential role in formulating
rules and regulations and helps an organisation in creating a good image in market. There are
various importance of business ethics in terms of academic level and managerial implications
which are discuss below:
Importance of business ethics at academic level-
 Enhance profitability- A business performing its operations and activities after
considering the concept of ethics helps in enhancing profitability of organisation. When
an organisation ethically perform its work it will reduce the unfair activities which will
affect the growth of business. Business ethics helps an organisation in formulating ethical
rules and regulations which will reduce their fraud and misconduct from company and
helps company to focus on goal and earn higher profit (Weeks, and Schaffert, 2019).
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 Enhance reputation- If an organisation perform its business activity by fulfilling ethics
it will create a positive image of company in society. Business ethics helps company to
perform corporate social responsibility which create their brand awareness in market.
 Increase level of investment- Business ethics helps an organisation in ethically perform
its business activities which will attract more and more investors towards company.
Investors feels safe at the time of investing their money in a business which perform their
work under ethics.
Importance of business ethics at managerial implications-
 Help in promoting ethical behaviour- Business ethics helps an management in
promoting ethical behaviour by regulating and formulating ethical rules and regulations.
An organisation performing its business activities under control of ethics guide behaviour
of their employees to do work ethically. Which will helps in their personal development
and also create a good image in market (Храмцова, 2018).
 Employee ethics- Business ethics are created by leader of organisation and from the
behaviour of leader employees learn. If management of an organisation follow ethics
their employee automatically perform ethical work.
CONCLUSION
From above discussion on this report it is concluded that ethics play an essential role in
any business growth and development. The concept of business ethics helps in understanding
appropriate business policies and practices regarding potentially controversial subjects such as
inside trading in organisation, discrimination and policies and practices related to CSR activities
and so on. Ethics helps an organisation in defining what is right and what is wrong. If a company
wants to achieve high growth and good reputation in market or society they needs to perform
their business operations under ethical rules and regulations. In this report triple bottom line and
corporate social responsibilities is analysed which helps in understanding that a business needs to
full fill all these approaches of sustainability and corporate social responsibility. Form this report
various types of stakeholder are analysed which have a stake or interest in business. Stakeholders
are divided into internal and external parts which includes customers, government, supplier,
owner, employees and so on. Other than this various importance of business ethics at academic
level and managerial implication are analysed.
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REFERENCES
Books and references
Borda, J., 2018. The essence of ethics in the business field (Bachelor's thesis, University of
Malta).
Cowton, C., and et. al. 2019. Business Ethics After the Global Financial Crisis: Lessons from the
Crash. Routledge.
Fine, C. and Rush, E., 2018. “Why does all the girls have to buy pink stuff?” The ethics and
science of the gendered toy marketing debate. Journal of Business Ethics. 149(4).
pp.769-784.
Gentina, E. and et. al. 2018. Coping with loneliness through materialism: Strategies matter for
adolescent development of unethical behaviors. Journal of Business Ethics. 152(1).
pp.103-122.
Goodpaster, K.E. And et. al. 2021. The Institutional Insight Underlying Shareholder/Stakeholder
Approaches to Business Ethics. Business Ethics and Catholic Social Thought. p.117.
Jackson, G., and et. al. 2020. Mandatory non-financial disclosure and its influence on CSR: An
international comparison. Journal of Business Ethics. 162(2). pp.323-342.
Karimi, A.K., 2020. Ethical Model of Business Ethics: Qur’an’s View. In Handbook of Ethics of
Islamic Economics and Finance (pp. 200-216). De Gruyter Oldenbourg.
Lee, J.W., and et. al. 2018. Antecedents of adopting corporate environmental responsibility and
green practices. Journal of Business Ethics. 148(2). pp.397-409.
Miasoid, H., 2020. CORPORATE ETHICS IN THE INTERNATIONAL HOTEL
BUSINESS. MODERN SCIENCE AND PRACTICE. p.28.
Pasricha, P., and et. al. 2018. Ethical leadership, organic organizational cultures and corporate
social responsibility: An empirical study in social enterprises. Journal of Business
Ethics. 151(4). pp.941-958.
Weeks, K.P. and Schaffert, C., 2019. Generational differences in definitions of meaningful work:
A mixed methods study. Journal of Business Ethics. 156(4). pp.1045-1061.
Храмцова, М.В., 2018. Popular business topics analysis from the point of view of business
ethics.
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