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Business Ethical Issues Definition

While carrying out business, people encounter numerous moral and ethical constraints, which is explained by the fact that the human factor dominates in business relationships. However, to solve the emerging disputes based on the infringement of moral principles, it is necessary to apply the legal issues that foster the balance of human relationships within the business environment. Therefore, the field of business ethics is a kind of a moral code to control business processes and activities and to avoid the violation of human rights. The consideration of the case study connected with the ethical dilemmas proved that there is an urgent necessity to examine the ethical theories to improve the current state in the sphere of business relations (McLachlan 2008). The case with “clean referrals” of ‘Lee Valley’ presents great interest in terms of ethical dilemmas involved (Spence 2009).

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“Edmond Journal” proposes the article narrating about a very original advertising technique successfully applied by Leonard Lee, a seventy-year-old founder and chairman of ‘Lee Valley Tools’, “a $ 100-million retail giant” (Spence 2009). According to Mr. Lee, the growth and prosperity of his company were based predominantly on referrals from existing customers. As the result, he managed to convert his customer into the advertising tool proved to be very effective as it attracted 43 000 new customers to the firm (Spence 2009).

The secret of Lee’s success lied in the fact that he would promise to give $ 5 to charity in case the existing customer provides an address and the name of some person to whom they can send advertising material (Spence 2009). Hence, three sides are involved in the scheme: ‘Lee Valley ‘, the customer, and the organization that receives “donations”. In that regard, the question arises concerning the validity of donations. At first sight, the legal issue is approved here, as Mr. Lee does not infringes on the law. In this case, charity serves as an efficient advertising tool that would not only increase the profitability of the company but also reveals the owner from the tax obligations. The ethical dilemma lies in the owner’s intentions, as there appears the necessity to establish the meaning of those donations that may not be considered as charity but a sort of bribery of the individuals, or the speculation on the feelings of customers. Mr. Lee mentions the scandal in the United States about manufacturers who paid doctors for presenting favorable papers on their devices (Spence 2009). Because the case is rather disputable, it requires further consideration.

As for the ethical approaches that will be used in the analysis, the deontological approach, which studies the act itself rather than the consequences of the act, should be used while considering the rightness of the method of Leonard Lee. Virtue ethics may be applied as well because the analysis of the intentions of the firm’s owner can provide the basis for the study and final decision. The application of teleological theory also suggests non-trivial results since the attraction of future clients is the main factor and the result of Lee’s strategy.

As it was mentioned before, deontology is more focused on moral absolutism where primary importance is given to the act itself. The deontological approach is closely connected with Kant who believed that “a person acts morally in doing “D” only if there is a principle “P” (O’Shaghnessy 1995). Regarding this, all moral issues are subjected to the feeling of internal duty requiring the appropriate behavior. Kant identifies the moral issues with the universal law originated from reason. Acting following moral principles means an escape from pleasure. Hence, the deontological approach has an act- and rule-focus. The former presupposes that common rules cannot be relevant in every situation suggesting that the principles used by the individuals should acknowledge the unique circumstances. As for the latter, a rule- deontological approach accentuates the priority of rules so that morality is subjected to rational thinking. The supporters of non-consequentialist theory expect that the obligations do not arise from consequences but the reliance on human dignity and worth. Summing up, this theory implies that our assessment of moral behavior and treatment demands the analysis of matters rather than the ends deducted from people’s actions (Israel et al. 2006).

The examination of the above theoretical issues justifies the premise that Lee’s act was not based on dignity. The main motivation of the owner was directed at increasing the profitability and prosperity of his company. Even though both parties benefited from this act, the initial ethical intention could not be morally justified and the veritable intention could not be regarded to the principle ‘do the right thing’. From the deontological point of view, the owner ignored the universal moral values and acted only in the personal and company’s interest. Lee assures that he does not do any harm to his customers and the surrounding; instead, he got his profit, and customers got their reward. Here, the moral infringement lies in manipulating people’s expectations and self-awareness that is the key to the company’s success.

Deontological theory in ethics is closely interwoven with Kantian Ethics, as both are based on internal intentions. The difference lies in the fact that Kantian theory suggests the motive as the most important inherent part of ethics. This philosophical approach is based on pity but on duty and obligation, namely, what “I ought to do” and “what I ought not”. This implies moral duty is based on personal intentions that do not depend on external ethical concepts. As a result, the may emerge the conflict of duties leading to misconception. According to Kant, “business practices are very likely to be excluded from moral arguments” (Jones et al. 2005). In the business realm, such situations are frequent as on the one hand, the owner’s main duty is to increase the companies’ potential and respectability and, on the other hand, the result of such competition could be harmful to people. The presented situation is based on the relative principle referring specifically to this problem, thus excluding the use of absolute ethical concepts.

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Lee’s case is a bright example of the conflict of duty. Naturally, Mr. Lee gives priority to the welfare of his business activities thus making his company competitive. In this case, the original technique chosen by him approves the results. Besides, if there are no other methods to improve the business, Lee’s action can be entirely justified. The benefits gained by the owner are also approved because these donations are still donations. In other words, business is more inclined to work out the techniques but not morality. Humans are not capable to always act in the right way due to their ignorance of the universal morale. Therefore, there should a strict difference between the technique and moral issues.

The next ethical approach implies the advantages of the character traits of the moral agent. The acts accomplished by a person are guided by inner incentives rather than by moral laws. For Aristotle, virtues “are dispositions to choose what is fine or noble for its own sake, and to avoid what base” (Darwall 2003) According to this theory, human activities are the expression of the character choice where the actions are valued itself as positive. In other words, an individual assesses the situation relying on his vision of the good and the evil. Therefore, there are cases when human ideas do not coincide with the established moral laws (Darwal 2003).

Moral virtue ethics can be also identified with the “moral esteem for benevolence” (Darwall 2003). If deontological ethics suggests the consideration of the morality of the act, virtue ethics, then, serves as the primary motivation for this act; it is the desire to produce right or wrong deeds. Therefore, people are initially guided by moral and non-moral virtues that can further influence their actions and their outcomes. The idea of guidance can be perceived when referring to the virtues as a model.

From the angle of virtue ethics theory, Lee’s case is hard to analyze. It is obvious that the action accomplished by the owner did not bear a positive intention, as his primary goal was to increase the revenues of the company. Lee’s behavior shows that he is guided by non-moral intension, although the outcome of this goal is noble and deserves moral esteem. Lee’s traits of character allow him to gain profit from his customers’ self-awareness, which is primarily led by the morals esteem for benevolence. Hence, the ‘purity of Lee’s referrals is at issue because the owner’s emotional motivations are subjected to his own ‘rules’ but not the universal moral principles. According to Lee, his motivation coincides with the relevance of the action and his inner guided purposes. In addition, as the decision made by the possessor of the virtues, the result will be subjective so that this virtues theory cannot be the leading one while carrying out business.

Teleology studies the goals and consequences of the final decisions. Regarding this theory, a moral theory identifies and explains the right actions and its analysis concerning the moral and non-moral base. For Aristotle, “knowledge of human good is the outcome of exercising the human of reason” (McEvan ). While comparing deontological and teleological theory, are based on the concept that there exists the right, which discloses morality as an internal obligation and duty, and the good, which manifests the values of thins and the goodness of actions. In that regard, the teleological approach gives priority to goodness where the right is the measure of the goodness.

In the realm of business, the teleological approach suggests that this measure can be presented with the owners’ values, whose primary purpose is to maximize the company’s income. By this, one could differentiate the differences between ordinary ethics and the moral rules applied within the business environment. Many problems could negatively affect business but these difficulties do not refer to the business ethics in business. False associations can generate wrong ethical decisions. This may happen when a business organization sets non-business purposes or when these goals are incompetent or incomplete. To define whether the objective is acceptable, it is necessary to identify the business capacities and corporate strategy. The problem is that some strategic goals are beyond the business concepts but still applied in business and therefore there emerge some ethical problems.

The ‘Lee Valley’ case shows that the owner’s method of advertising did not include the business strategic plans. Lee’s false presentation of his intentions deluded the customers; the owner takes advantage of the customers’ moral awareness who believes that this charity is a pure sacrifice. Lee’s real intention to gain profit is disguised by a false sacrifice. However, if regarding the outcome of the action, it should be stressed that all the parties benefitted from it. Lee maximized the sales volumes and revenues, which is the main purpose of the business. From the teleological point of view, this action could not be morally criticized if this action happened beyond the business environment. Taking into consideration the overall estimation of the case, Lee’s behavior might be approved in terms of the prevailing goodness of the end. Business and ownership should exclude the ordinary moral principles as business ethics is a specific field of study and the phrase ‘just business’ is rather appropriate here (Sternberg 2000).

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The consideration of the ethical theories applied for the case analysis shows that each approach either approves or disapproves of the ‘Lee Valley’ policy. A different explanation of the case under consideration depends on various factors presented in it. First of all, the judgment of the case is influenced by the positions discussed in the analysis, that is the owner, the customer, and the charitable organization. In that regard, the most profitable position here takes Mr. Lee and the welfare institution. Secondly, legal issues can be also subjected to the ethical analysis; in this respect, Mr. Lee managed to follow all the legal principles, which are acknowledged as the internationally established norm of morality.

Regarding the approaches, the only technique that justifies Lee’s action is a teleological approach that shows that sometimes the result of the actions is more important rather than the initial intention. Further, Kantian theory approves Lee’s internal motives, as, according to this theory, morality has nothing to do with business. In addition, the approach admits if a conflict of duty occurs in business, it is obvious that the owner chooses the variant that would be favorable for his/her company. As for the other theories that consider morality as a range of virtues inherent to a person, they do not recognize this act as morally right. Involving the personal quality of an individual in the business field proves that there is no place for morality here. Therefore, Lee’s deed cannot be approved from the deontological point of view as his act was directed at absolute goodness; instead, it was accomplished for personal benefit.

Reference List

Darwall, S. L. (2003). Virtue Ethics. US: Willey-Blackwell.

Israel, M. and Hay, L. (2006). Research ethics for social scientists: between ethical conduct and regulatory compliance. US: SAGE.

Jones, C., Martin, P., and Bos, R. (2005). For Business ethics. UK: Routledge.

McEvan (2001). Managing Values and beliefs in organizations. US: Pearson Education.

McLachlan, J.A. (2008). The Right Choice: Making Ethical Decisions on the Job. Toronto: Pearson Education Canada.

O’Shaughnessy, J. Competitive Marketing: a strategic approach. (1995). London: Routledge

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Spence, R. (2009). Lee Valley’s ‘Clean’ Referrals. Edmonton Journal. Web.

Sternberg, E. (2000). Just Business: business ethics in action. US: Oxford University Press.

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