Analysis of Ethical Issues in Management: Case Studies

This report provides a detailed analysis of management ethics, focusing on three case studies: Retail Food Group (RFG) and IOOF. The RFG case examines ethical issues related to franchise owner treatment, including high labor costs, low fees, and unfair practices, as well as vertical integration. The IOOF case delves into insider trading, misuse of client funds, and unethical financial advice, highlighting breaches of ethical standards and regulatory violations. The report identifies stakeholders, key terms, and ethical issues such as beneficence, autonomy, and justice. It also offers recommendations for ethical improvements, including changes in company perceptions, fair treatment of employees and suppliers, and adherence to ethical business practices. The report aims to provide insights into ethical decision-making and its impact on business operations and stakeholders.

Running Head: MANAGEMENT ETHICS
MANAGEMENT ETHICS
Name of the Student
Name of the University
Author Note

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Table of Contents
Response to case 1.........................................................................................................2
Background................................................................................................................2
Stakeholders...............................................................................................................2
Key Terms..................................................................................................................2
Ethical Issues..............................................................................................................3
Recommendation........................................................................................................4
Response to case 2.........................................................................................................5
Background................................................................................................................5
Stakeholders...............................................................................................................5
Key Terms..................................................................................................................5
Ethical Issues..............................................................................................................5
Recommendations......................................................................................................8
Response to case 3.........................................................................................................8
Background................................................................................................................8
Stakeholders...............................................................................................................9
Key Terms..................................................................................................................9
Ethical issues..............................................................................................................9
Recommendation......................................................................................................11
References....................................................................................................................12

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Response to case 1
Background
In this case the management ethics has been discussed in accordance to a retail food
group. RFG or Retail Food Group is a global food and beverage company which is
headquartered in Queensland, Australia. It is a multi-brand retail food franchise owner. It is
also a roster and raw materials suppliers of high quality coffee products. It is one of the
emerging leader in the food service industry as well as the dairy processing and the bakery
sector (Retail Food Group 2019).
Stakeholders
The executives of RFG, their franchise owners and finally the customers of the RFG
retail groups are the stakeholders as they are involved with the food retail giant. These people
form the most affected as they have either a direct or indirect link with that of the company.
Key Terms
The important terms that is identified with this particular case theory is vertical
integration. Vertical integration is a business strategy that is being used by the companies to
consolidate their positions in the market and among the competitors. It is also used as a
competitive strategy by the help of which the company will control all over the production
and distribution of a product. A company might choose vertical integration in order to have a
full control over the supply of raw materials for manufacturing the products.
Ethical Issues
The main ethical issues that can be related to this scenario are beneficence, respect for
autonomy and the right to justice (Chonko 2012). All these three ethical issues were curbed in

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the case of Julia Banks who was a franchise owner under RFG. The principle of beneficence
guides the decision maker to do what is good and what is not. This right was taken away from
the Banks by the Gold-Coast based retail group. The retail group used to impose on them the
high labour cost, give them low fees and would impose higher food production. RFG had also
affected the autonomy of all its franchisee which is considered to be immoral. Decision
making should be a function of management and organization (Rawal 2013). This simple
principle was not followed up by the franchisee amalgator. They should have respected the
views and problems faced by their different franchisee owners. There was no right to justice
for the franchisee owner under the RFG. They were unnecessary threatened by the company
to pay fees that were not at all mentioned at the time of agreement. The main ethical issue
with RFG is that it does not consider the franchisee owners but is always after the
shareholders. They try to keep their shareholders happy while causing a lot of trouble to the
franchisee. It has become their business action plan to acquire a brand then to reduce the
franchisee support staff, reduce their supplier’s price, milking away the profits until the brand
wears out.
In making ethical decisions three most important things are needed which are ethical
egoism that believes in the self-serving of others. It is also reflected through the utilitarianism
and altruism that believes in helping others (Wills 2014). In business ethical behaviour is
seen in decision making along with effectiveness of leader, job satisfaction of the juniors as
well as employee dedication. The organizations that perform ethically are those whose
decisions continuously acknowledges the well-being of each and every stakeholders be it
small scale businessmen or large brand companies (Zeni and Griffith 2016). RFG leverage
unnecessary charges from them which the franchise owners had to give by cutting down
prices of their labours and increasing food cost. RFG also charges money from the franchise
to use their brand name. The retail group has a lots of ways to curb the economic freedom of

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its franchise owners by taking a training fees and also from the raw materials they supply to
their franchisees. RFG also plays against the labour laws that have become an integral part of
the ethicalities in business management. The conditions they force on the franchisee forces
them to sham employment and hire overseas workers at a reduced price. This is totally
against the labour laws (Mei 2013). RFG has also failed to maintain their conditions in the
supply chain. They were affecting the rights of the suppliers either due to renegotiating from
the franchisee’s suppliers or by supplying raw materials to the franchisee and demanding
high amount for it in return. Studies have shown that by maintaining ethical relations with the
suppliers there is a state of general belief among the company management and the vendors.
This sense of trust also helps to drive the business towards the forward direction (Wither and
Ebrahimpour 2018)
Recommendation
The company uses moral autonomy and takes decision independent of others without
thinking about the ethical issues. Hence, it is important for the company to change their
perception about employee and employee management. They can take moral decisions and
should also consider the human rights as they were paying their employees very poorly. The
behaviour of the company is also not good towards the suppliers and hence they should try to
resolve their issue of vertical integration with that of the suppliers. The company should not
interfere with the franchise owners’ right to take decision. These problems can be solved
through moral constraints, by developing virtuous moral character as well as creating moral
contexts in their business and management. RFG’s other ethical concern such as applying
unnecessary charges from the franchisee owners and taking the maximum profit from them
can be corrected by applying justice in their managerial actions. This can be achieved by
balancing the moral and material values as well as by the structuring of ownership

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participation. Ownership participation can be increased by providing free of cost training to
the workers and franchisee owners, by paying bonus and also by addressing of grievances.
Response to case 2
Background
In this case insider trading is discussed. IOOF is an Australia based financial services
company that offers financial advice, investment management along with trustee services.
Independent Order of Odd fellows which is more popularly known as IOOF was started with
the intention of providing the members with maximum benefit. However, in the last few
years it has grown by the acquisition and has become the second largest non-bank financial
planning network in the country.
Stakeholders
The people involved in the business are the IOOF executives, chairperson, the
company employees as well as their clients who had kept their money in the business.
Key Terms
The important term discussed in the topic is insider trading. Insider trading is defined
as the illegal practice of stock exchange for the advantage of an individual through the access
to the confidential information. Illegal insider trading includes giving tips to others when an
individual have any sort of inside information. The insider information or tips allows some
people to earn profits while others incur loss.
Ethical Issues
The company started off as a cooperative but after it became demutualised, the value
that has been stored for a long time was converted into tradable share. The primary function
of a stock exchange company is to give a stage for the trading of values or securities. This

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allows the investors to distribute their investments in a more secured manner and also to
increase the liquidity (Rawal 2017). Now, to cope up with the existing competition stock
exchanges require funds. The member owned stock exchanges find it difficult to raise the
money. This is what exactly happened to IOOF. As, it started with 150 odd fellows after
demutualisation they found it difficult to trade instead of using their own resources the
company used the money from the superannuation funds that it used to manage. However,
using the clients’ money to restore the company’s lost profit is against the ethics. After this
they managed their superannuation clients by providing them compensation from their own
money. This was fraudulence as the company used their money, but in compensation should
pay the clients with the company’s money made from gaining profits. The company’s
acquisitions have also affected the employees as their fees and bonuses were cut to boost up
the margin. This also showed the unethical viewpoint of the company as the first and
foremost duty of a company is to provide its employees with assets that help them to do their
best at the job (Richter 2018). The financial scam at IOOF also reveals that they were using
the financial advisers to influence their clients. They were offering that piece of advice to the
client that was profitable to the company without even thinking about the client’s profit. This
was against the agency theory in the business ethics (Namazi 2013). They were in a way
cheating their client by not providing them with the necessary information that is required to
take the financial decision. The Australian Prudential Regulation Authority (APRA) has also
charged the company to file a case against them as they were not able to play their role
positively as superannuation trustee and their standards were also not meeting with that of
prudential standards. APRA aims to provide security to the consumers and thus they charged
IOOF against fraud cases (Archive.treasury.gov.au 2019). As they were lacking in their
ethical practices one of their former employee acted as a whistle-blower who alleged them
and thus inquiry was set up by the ASIC (Australian Security and Investment Commission).

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The major acquisitions were that of insider trading that involved the leaking of their private
and confidential data of the clients. This should have been managed by the company as the
maintenance of client privacy and confidentiality comes at the top for the company. They
breached the normal ethical conditions that must be prevalent in any company under any
circumstances (Asic.gov.au 2019).
Ethics in business is dominated by two perspectives namely normative which is
prescriptive while the other one is empirical which is descriptive (Smit 2013). The
maintenance of ethical behaviour in business completely changes the outlook of that
particular business. When the company faced money issues then they tried to resolve it using
the money of their clients. This behaviour of the company greatly affected their ethical
behaviour. Next concern with the company was that it was giving financial advices to the
clients that was not working for their benefit but for the profit of their own company. This
was again a great ethical concern as the company was not working for the benefit of the client
but towards their own benefit. However, as per the ethical laws are concerned every company
should work towards the benefit of their clients (Richter 2013). Their top priority should
always be beneficence that is doing good to others (Chonko 2012). The next great ethical
concern was the use of confidential information of the market to make profits. The company
was involved with insider trading and was leaking the information that could have been used
by the clients to make profits. The company also lacked to work towards the benefit of their
own employees. Moreover, they were also not seeking the help of ASIC to solve their
finance related matters. All the above mentioned problems were solved internally. This again
curbed the client’s as well as the employee’s right to justice (Chonko 2012). There are also
management frameworks that creates conflicts between their members. There are always
certain ethical concerns that an employee wants from that of the employer (Glinkowska and
Kaczmarek 2015). It violated the stewardship theory that conserves the interests of the

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employees. It becomes necessary to create new possibilities to make the employees more
skilled and also to protect the employees’ rights (Grabara 2013).
Recommendations
IOOF were violating a lot of ethical rights be it that of their clients or the employees
who took a stand against all the ethical issues in the company. It is of high concern that ethics
in finance sector should be the top most priority. Their violations can cause an inconsistency
in the financial-economic framework. The company’s issues of insider trading can be solved
by the development of moral concepts in the employees of IOOF and also through keeping an
eye on the source of information. The company should respect the client’s privacy. IOOF also
used the client’s money to recover their own loses and this can be avoided by the use of
beneficence.
Response to case 3
Background
The elderly are getting treated so badly now that it is meeting the legal definitions of
torture. Neglecting and abusing breach the internationally recognised inhibition on degrading
treatment. The Care Quality Commission is accused of failing to identify and prevent the
abuse of basic human rights of the elderly people (Telegraph.co.uk 2019). BUPA is a non-
profit company involved in international healthcare. The company started out with a mission
to help others live healthy and happy lives and thus follow a set of fundamental values to
work ethically in their business. They also run aged residential home care services at various
locations.

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Stakeholders
The stakeholders involved in the case of BUPA are the company officials, work force
at the residential aged care centre, the elderly living in the centre and their family members.
Key Terms
The key terms in this case is targeting the elderly. Now-a-days elderly are targeted
due to their isolation, easy gain of trust and more savings. They face a lot of abuse in the aged
care home where they are kept either financially or through physical or mental torturing.
Ethical issues
BUPA is seen to be involved with employee shaming. They were often given poor
pay and increased work load due to staff shortage. This is against the theory of beneficence of
any company. The company’s management should be accountable to their employee’s benefit
and development (Richter 2013). The management of the elderly care should include a
transparent framework that will always ensure the best of client’s interests. Another major
ethical consideration that the caregivers need to follow is non-maleficence. The caregiver
should do no harm to the elderly, this should be their major concern, and they should not
intentionally harm any person who is under their care. The old age homes should make sure
that the care giving professionals are well rested and well paid as they do an important job
and without proper remuneration they might ignore their responsibility or do their job half-
heartedly (Fazeipour and Farreira 2013).A lot of incidences happened at BUPA that was
against the interest of the elderly living there. The security of the people living there was not
looked after. One of the person at the BUPA residential was mistreated by a company staff.
This showed their unethical behaviour as the company was not able to protect their clients
(Richter 2013). There were also issues regarding the quality of food and medication given to
the individuals living in their care homes. The first and foremost duty of any elderly care

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home is to give them protection along with the medication they need (Brownie and
Nancarrow 2013). The care home due to lack of proper staff and help are not able to manage
the needs of the people. As per the ethical theory of beneficence the care provider should do
all the things they can to provide the benefit to each individual. The staff should be well
familiar with the type of medications needed for each patient but at the BUPA care centre
some individuals either did not receive any medications or were given the medications of
other persons. The family pays the money that they demand in exchange of proper care of the
elderly, when they fail to deliver it, it reflects badly on the reputation of the old age home or
the hospice care. Care for the old people is an extremely complicated process and it should be
harnessed by developing a trustworthy relation between the caregiver and the older person.
They should not challenge their ethical moral while giving care for the elderly. This can only
be managed when there is support from the higher authorities and strict regulations towards
the care given out for the elderly at the private homes.
BUPA also violated consumer rights of their clients who had paid them a huge
amount of money for the care and management of their family members. The protection of
consumer rights is very core of a company’s values. The ethical issues in healthcare and
nursing can be understood from the perspectives of action and relational ethics. BUPA should
focus on these two types of ethics. As per the action ethics BUPA should focus on the
betterment of their management to take care of the elderly people. As they are in the service
industry so they should also try to manage their staff and train them in a way that they can
work efficiently with that of the older people (Landau 2013). The company needs a complete
renovated customer care system. They were failing in every aspect of customer satisfaction. It
needs to be sustainable in both ethical as well as in management to keep a pace with the fast
changes in healthcare (Fazeipour and Farreira 2013). The main ethical concern of the
company should be their customer satisfaction which they lack. They should focus on the key

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ethical aspects that must include service quality and patient satisfaction. They should also
meet the demands of the clients’ family members in order of providing the elderly with
proper food, sanitation and hygiene. Client satisfaction in the healthcare system is related to
sustainability. The level of patient satisfaction is analogous to customer satisfaction in the
healthcare sector.
Recommendation
The company can solve the ethical issues in a lot of ways by adding security check
on the person taking care of the elderly in the health care centre. The caregivers should
believe and follow beneficence, which means doing good in every situation. The caregivers
should realize that the quality of care that the elderly gets is directly related to the life span of
the elder. There were certain co-workers in the staff who were offensive towards the elderly
people and thus, this ethical issue can be rectified by the development of a non-maleficence
attitude by the workers towards the clients. According to the Agency theory the relationship
between the agents and the business officials should be resolved in order to get benefit of
organization. This theory can be taken into consideration by BUPA so that the executives of
the company can solve the internal issues first which will ultimately affect their clients’
satisfaction.