Business Ethics Report: An Analysis of Samsung's Bribery Scandal

This report delves into the Samsung bribery case, examining its ethical implications within a business context. It begins by defining business ethics and its application to the case, particularly focusing on the charges against Lee Jae-yong. The report then explores corporate governance, analyzing its principles and how Samsung's actions deviated from them, impacting shareholders and customers. It further investigates corporate social responsibility (CSR), assessing how the bribery scandal undermined Samsung's CSR efforts and raised questions about its ethical conduct. The core of the report analyzes the case through normative and descriptive ethical theories, evaluating what actions should have been taken and what actions were actually taken by Lee. Finally, the report conducts a stakeholder analysis, identifying and assessing the interests of various stakeholders, including employees, shareholders, and the public, and how the scandal affected them. The conclusion summarizes the key findings and reinforces the importance of ethical behavior in business, drawing on the analysis of the Samsung case and the application of ethical theories.

Business Ethics

Contents
MAIN BODY..................................................................................................................................................................1
MAIN BODY..................................................................................................................................................................1
Part 1..........................................................................................................................................................................1
Part 2..........................................................................................................................................................................2
Part 3..........................................................................................................................................................................4
CONCLUSION...............................................................................................................................................................7
REFERENCES...............................................................................................................................................................8

INTRODUCTION
Business ethics refers to the application of ethics to business. To be more specific business ethics
is the study of good evil, right and wrong and justice or injustice actions of businessmen. It may
be defined as a set of moral standards which people owning and managing business is expected
to follow. These standards are mean to govern the conduct of business person. This report is
conducted in context of Samsung’s bribery charges, Samsung is an electronics multinational
company it is South Korean company and its headquartered in Suwon. This case is about charge
against Lee for bribery arose during a national scandal in 2016. This report covers topics
corporate governance, normative and descriptive business ethics theory and analysis of
stakeholder of company.
MAIN BODY
Part 1
Corporate Governance
Corporate Governance is the set of processes, customs, policies, laws, and institutions affecting a
way a corporation is directed, administrated or controlled. Corporate governance is also
including the relationships among the many stakeholders involved and the goals for which
corporation is governed. The principal stakeholders are the shareholders, the board of directors,
employees, customers, creditors, suppliers, and community at large. It is a system by which
companies are directed and controlled, boards of directors are responsible for governance of
companies. Corporate governance is also concerned with ethics, values, and morals of a
company and its directors. Corporate governance is concerned with holding the balance between
economic and social goals and between individuals and communal goals. (Boatright, J.R., 2017)
The corporate governance framework is there to encourage the efficient use of resources and
equally for accountability for the stewardship of those resources. The main motive is to align as
nearly as possible the interests of individuals, corporations, and society. Vice chairman of
Samsung JY Lee stuck in scandal, in case that he gave bribes in form of money and horses to
park’s aide in return for government support for controversial merger of two business group
affiliates which is true and for this company pay huge amount also this affect the image of
Samsung in market. If Samsung want to run their business organization, they have to follow
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proper system of corporate governance, every corporate sector knows this bribe is a crime for
this they have to huge amount, so every company need to maintain proper customs, policies,
laws to direct company in right direction. This case of Samsung affects their shareholders and
create negative impact on the customers.
Corporate Social Responsibility
Corporate social responsibility is obligation of a business to take those decisions and perform
those actions which are considered desirable in respect of objectives and values of our society.
CSR is form of corporate self-regulations integrated into a business model. Ideally, CSR policy
would function as built-in, self-regulating mechanism whereby business would monitor and
ensure its support to law, ethical standards, and international norms. CSR is not just an issue for
large multinational but its voluntariness, diversity and flexibility are vital to allowing all
businesses, regardless of size or location, to consider how best they can response to the realities
of their market place. Social responsibility of business is an ethical, concept involving motions of
human welfare and improving the quality of life in society. CSR is a positive approach business
driven response to the business environment of today. CSR is not an add-on for businesses it is
increasingly being integrated into business operations, governance, management system and
thinking. It must therefore be seen within the context of the totality of business today. Social
responsibility is a multi-dimensional concept covering social, economic and environmental
concern and is continually evolving within diversity of the market. Samsung also have some
social responsibilities towards their society they follow it properly but after that case Samsung’s
bribery charges there is various points against Samsung corporate social responsibility this
affects the brand image of Samsung. Due to the supreme court’s decision, Lee could potentially
face heavier sentence than previously due to increase in the total monetary value of what is
deemed as a bribe under criminal law, he sentences to five year in prison. This shows that
company is not perform their social responsibility properly and this case also raise many
questions in society towards Samsung.
Part 2
Normative Theory
This theory is attempts to answer specific moral questions concerning what people should do or
believe. Normative refers to norms or guidelines and is often used interchangeably with the
world prescriptive. It involves arriving at moral standards that regulate right and wrong conduct.
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In sense, it is a search for an ideal litmus test of proper behaviour. Everyone is a moral agent;
people cannot avoid the fact that their decisions and actions have moral consequence. In a
diverse, Pluralistic business environment, the moral consequence of those decisions and actions
may not be uniformly understood. When people are part of an organization, the morality of
individuals has an impact on moral agency of the organization. Perspective is a means for
reasonable people to examine moral dilemmas together and develop guidelines for both
individual and collective moral agency that can be considered valid from multiple moral
standpoints. Organizational Leaders play crucial role in establishing an environment conducive
to effective moral agency. Every businessman has to use fair means to win the competition but
JY Lee chose wrong way, based on golden rule it would also be wrong for to lie, to harass,
victimize, assault and bribe. JY lee didn’t follow this theory in the Samsung, which affect his
image with this he feels guilty, He chose totally wrong way and because of him company also
have suffer.
Descriptive Theory
This theory is defined as the presentation of fact related to the specific ethical actions of an
individual or organization. It is concerned with describing, characterizing, and studying the
morality of people, a culture or a society. It also compares and contrasts different moral, codes,
systems, practices, beliefs and values. In descriptive business ethics, therefore, the focus is on
learning what occurring in the realm of behaviour, actions, decisions, policies, and practices of
business organizations, managers, or specific industries. The category of descriptive ethics is the
easiest to understand – it simply involves describing how people behave and/or what sort of
moral standards they claim to follow. Descriptive ethic theory incorporates research from the
fields of anthropology, psychology, sociology and history, as part of the process of
understanding what people do or have believed about norms. (Morrison, J., 2015.) It also studies
the codes of conducts created by professionals’ organizations to regulate the conduct of member.
Descriptive theory is sometimes referred to as comparative ethics because it often involves
comparing ethical system- comparing the ethics of the past of the present; comparing the ethics
of one society to another; and comparing the ethics which people claim to follow with the actual
rules of conduct which do describe their actions. Descriptive ethic might identify and try to
explain discrepancies between what people claim to believe about morality and what they
actually do in making moral choice. The head of Samsung, one of the world’s largest
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conglomerates was indicated on bribe and embezzlement charges. This action of Lee Jae Yong,
present the facts related to their ethics, his bribe case describes his characteristic and studying
morality. The work done by JY lee is that he is unethical this ruin his image in public and also
affects the image of Samsung. This case has been expected and were not seen as indications of a
threat to the Lee family’s control of the business. This really wrong decision taken by lee this
shows his ethical behaviour in public. South Koreans have grown weary South Koreans have
grown weary of endemic corruption and the country’s traditional leniency toward tycoons
accused of white-collar crimes. For decades, presidents have entered office vowing to end such
favoritism, but they all eventually backtracked. Anticorruption advocates say Mr. Lee’s
indictment and trial will be a test of whether the system can finally make a dent in those cozy
relationships.
Samsung, by far the largest of the chaebol, has long been a symbol of power and wealth in a
nation that has transformed itself from an agrarian economy to one of the world’s technological
powerhouses. Samsung’s market capitalization accounts for one-fourth of the value of all listed
companies in South Korea, and its main unit, Samsung Electronics, alone ships 20 percent of the
country’s total exports.
Part 3
Stakeholder analysis is an activity of finding out the people who are making their
contribution and ready to support the project of the firm. The organisation identifies these
individual before the project begins, grouping them as per their extents of participation, interest
and influence in the project and determining how best to consist and communicate each of these
Stakeholder groups throughout (Crane,A. and et. al., 2019). It is an essential technique for
stakeholder identification and determining their requirements. It is utilised to find out all key like
primary and secondary stakeholders who have interest in the problems with which the project is
disturbed. The main motive of this analysis is to develop a strategic view of the human and
institutional landscape and the relationships among the different investors and the problems they
care about most. For conducting a stakeholder analysis, there are steps that can be consider such
as identify all stakeholder, documenting stakeholders needs, analysing their interest, managing
stakeholders expectations, taking actions and reviewing status. In Samsung, the administration of
the firm can use these phases to do stakeholder analysis.
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Identify all stakeholder, in this step, the management can segregate and classified
stakeholders on the basis of internal and external investors. In respective organisation, the
internal stakeholder of the company is employees, board of director, manager etc. External
stakeholders of the venture are creditors, directors, government, employees, owners, suppliers,
unions and community. All stakeholders should be initially considered and possibly dropped in
later phases of the analysis. It is often hard to force classifications into teams and monitor who is
considered truly internally and externally the project context. Documenting stakeholder’s needs
is another step within which the administration of respective company can listed capitalist with
their key interests possible extent of impact to the project and priority in relation to other
stakeholders. Once the main interest are found out then it is also useful to outline the how the
project will be influenced if there are or are not met (Duska, Duska and Kury, 2018). Within this
phase, the firm can found out needs related to effective return.
Analysis of interest, in this step, determining whether stakeholders in a position of strong
impact hold unfavourable interests may be complex to project success. This level of
understanding can best be reached through organising a formal evaluation of each stakeholder’s
extent of significance and influence to the project. In Samsung, influence refers an investor’s
relative power over and in a project. A stakeholder with high influence would control key
determinations within the project and have strong capability to make easy functioning of project
tasks and cause others to take action (Painter-Morland, 2019). Managing stakeholder’s
expectations, in this step, the management of the company formulate plan of action and
strategies to manage needs and demands of stakeholders. The all over investor’s administration
strategy documents the tactics for the approach for administrating and communicating with the
capitalists. The regularity of communication and overseeing based on the prioritization of the
stakeholders. Higher priority cause higher administration attention. The key stakeholder has
large influence on the growth of the project and is therefore requiring most communication and
administration attention. Taking actions and reviewing status, it is final phase, in which the
administration of the firm like Samsung takes corrective action in term of fulfilling the needs of
its investors and retaining them till long time duration. In Samsung due to scandal of Bribery
Charges, the stakeholder of the company also influences. The description of internal and external
stakeholder’s ethical and unethical practices is as below:
Internal Stakeholders Ethical practices Unethical practices
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Employees Samsung can form ethical
practice for their workforce as
they are effective resource of
the company who make their
contribution in running the
business of the firm in
effective manner. So, for them
they follow legislative laws by
offering equal pay and growth
option treatment to them.
In unethical, the firm cannot
concentrates the issues that
was completed by the side of
the consumers as they abuses
customer services provider
employees and Samsung
cannot notice them (Werhane,
2019).
Directors In this Samsung can follow
the ethical practice that is
associated with directors. In
this, they provide them top
priority and each leader and
employee can listen them
carefully.
In Unethical practise,
organisation cannot make
effective determinations and
not appropriately concentrates
on the actions. This will direct
to loss for the business
enterprise.
Shareholders Internal investors of the firm
can follow code of conduct
that is a social accountability
of them. In this, they mainly
concentrate on the security
that is essential for the
company.
In unethical forms, they
generate a duplicate account
through which they lent a
worker to beat the rivalry
(Ciulla, 2020).
External Stakeholder Ethical practices Unethical practices
Customers In ethical terms customer’s
needs fulfilment is one of the
prior practice that is done by
Samsung.
In Unethical terms, wrong
behaviour and communication
of store managers with target
audiences shows bad image of
the firm.
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Directors This term connected to the
external factor directors can
talk to their stakeholders out
of raising fund from some
other source (Arnold,
Beauchamp and Bowie, 2019).
In this form, directors can’t
mainly concentrate on the
improving their image rather
than appropriately executing
the task.
Shareholders In this, they can invest their
money by utilising effective
legislations and rules and
legislations.
In unethical form, they do not
concentrate on the
organisation’s advantages.
They only notice that they get
more and more returns which
they invest in the business.
Due to this corruption scandal in Samsung both internal and external stakeholders are
affected as the chairman make a fraud to maintain the rank of the company in term of offering
money in for of corruption. This creates a negative brand image of the firm in marketplace and
unfavourably influences its customers, shareholders and other investors of the venture. Due to
this scandal, the stakeholder think before invest in it and it also affect the sales, profits and
productiveness of the company negatively.
CONCLUSION
In this report it has been concluded that the case of Samsung’s bribery charges is really
unethical, JY lee done wrong thing for which he has to pay and this action of Samsung
company’s executive affects their policies, norms, laws and also their Corporate social
responsibility their image in market. This case also affects their organization structure and their
stakeholders, employees, suppliers, investors, directors. This also affect the image of Samsung
company in market because is a multinational company and this unethical behaviour of their
executive affect the brand image.
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REFERENCES
Books & Journals
Crane,A. and et. al., 2019. Business ethics: Managing corporate citizenship and sustainability in
the age of globalization. Oxford University Press, USA.
Duska, R.F., Duska, B.S. and Kury, K.W., 2018. Accounting ethics. John Wiley & Sons.
Painter-Morland, M., 2019. Business ethics as practice: Ethics as the everyday business of
business. Cambridge University Press.
Werhane, P.H., 2019. The normative/descriptive distinction in methodologies of business ethics.
In Systems Thinking and Moral Imagination (pp. 21-25). Springer, Cham.
Ciulla, J.B., 2020. The importance of leadership in shaping business values. In The Search for
Ethics in Leadership, Business, and Beyond (pp. 153-163). Springer, Cham.
Arnold, D.G., Beauchamp, T.L. and Bowie, N.E., 2019. Ethical theory and business. Cambridge
University Press.
Ims, K.J. and Pedersen, L.J.T., 2015. Business and the Greater Good: Rethinking Business
Ethics in an Age of Crisis. Edward Elgar Publishing.
Ghazali, N.A.M., 2015. The influence of a business ethics course on ethical judgments of
Malaysian accountants. Journal of Asia Business Studies.
Morrison, J., 2015. Business ethics: New challenges in a globalised world. Macmillan
International Higher Education.
Rendtorff, J.D., 2017. Cosmopolitan business ethics: Towards a global ethos of management.
Routledge.
Boatright, J.R., 2017. Ethics and corporate governance: Justifying the role of shareholder. The
Blackwell guide to business ethics, pp.38-60.
Ciampi, F., 2015. Corporate governance characteristics and default prediction modeling for small
enterprises. An empirical analysis of Italian firms. Journal of Business Research, 68(5), pp.1012-
1025.
Online
Stakeholder Analysis: Securing the Buy-in You Need. 2020. [Online]. Available Through: <
https://www.lucidchart.com/blog/how-to-do-a-stakeholder-analysis >.
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