Question 1 Identify the moral issues that are raised by Pepsi’s presence in Burma. A moral issue can be defined as any issue concerning how one ought to behave, how others ought to behave, or whether a situation is proper or improper. Morality is judged based on what is right or wrong.
Pepsi’s presence in Burma raised several ethical and moral concerns due government operations under the military regime. In the 1990’s Burma was undergoing social, economic and political crisis under the military rule of the State Law & Order Restoration Council (SLORC). During this time the state economy became open and provided opportunities that Pepsi, among other companies, could exploit. These opportunities involved low labour cost, possible links to other markets and high literacy rates.
It was believed that if Pepsi had continued to operate fully or partially in Burma they would be in support of the unfair and inhumane military treatment by the military regime to the citizens of that country. Burmese nationals worked under harsh conditions, their human rights were violated, they did not have freedom of speech, faced unjust imprisonment and some were even put to death if they chose not to conform to the military.
These ethical issues, raised a lot of concerns to the U.S. Department of State and others as those treatments were immoral and unethical and if Pepsi continued to operate in Burma they would be seen as in support of such behaviours. Pepsi’s ethical obligations should have involved fairness, safety and honesty to the main stakeholders (consumers, employees, shareholders and the community) of their business and Burma did not provide the right bases to satisfy these obligations.
Question 2 Discuss the issues from a utilitarian and moral rights perspective. The utilitarian view is a part of the teleological view that states that states that an act can be considered to be moral if it produces a desired result or benefit, whether personally or for a group. According to Ferrell & Fraedrich (1994), utilitarianism is concerned with consequences; however the utilitarian seeks the greatest good for the greatest number of people. Utilitarian’s belief is that they should make decisions that result in the greatest total utility or greatest total benefits for all those affected by the decision.
According to Joseph Weiss, rights are based on several sources of authority. Moral or human rights are universal and are based on norms in every society. For example one has a moral right to not be enslaved and the right to work. Moral rights also provide the freedom to pursue one’s interest, as long as they do not violate the rights of others. Moral rights also allow individuals to justify their actions and seek protection from others in doing so.
From a utilitarian point of view, if Pepsi had continued their operations in Burma, only a few persons would be benefiting from their operations. They would not have made their decision based on the greater good of the greater number of people. They would have experienced more disadvantages than benefits. The main disadvantage, among others such as boycotting of their products in other countries, was that the Burmese dollar had no value outside of the country making it impossible for American companies to transfer their profits outside of Burma resulting in a high dependency on countertrade within the country.
However, if Pepsi had ended all business ties with the Burmese Government, they would be doing the greater good for the greater number of people and at the same time expressing to the world their stance in the situation. Their benefits would surpass their disadvantages providing the company with a specific desired result justifying a means to the end of the situation.
From a moral rights perspective, Burmese nationals were suffering. They were basically seen as slaves, they were not justly paid, were punished severely if they spoke out against certain things and they had no representation by the government despite the harsh conditions under which they work. Their moral rights are totally eroded because the SLORC continued to restrict their basic rights to free speech, association and assembly.
These are moral rights that every individual should be afforded and if there is such a country, institution or otherwise that does not allow this, it is suggested that, in the case of Burma, no company should invest in such a country.
Question 3 Business decisions are about what is profitable; the business organization’s decision to invest should not be guided by the social climate in the country. Discuss According to the Business Dictionary, profitability is defined as the state or condition of yielding a financial profit or gain and it is agreed upon that every company’s goal is to be earning consistently. Being of the view that profitability of the business comes first supports the view of Friedman that states that, “the social responsibility of a business is to increase its profits.” However, if a business focuses on the economical aspect of its operations it may over look other important aspects such as ethics and law and should therefore take into consideration the social climate in which it will be conducting business.
Therefore, the theory put forth by the theorist Freeman should be considered. It highlights that any individual or group that can impact or be impacted by the actions of the firm should be considered in its operations. In order for the business to be fully socially responsible it must take into account these four areas, philanthropy, ethics, legal and economics. Social responsibility in business refers to an organization’s obligation to maximize its positive impact on stakeholders, such as customers, owners, employers, community, suppliers and the government and to minimize its negative impact.
To be legally responsible, which is required, they should abide by all the laws and government regulations. To be ethical, which is an expected state, they should follow standards of acceptable behaviour as judged by stakeholders. To be economically responsible, they are required to maximize shareholders wealth and or value and to be philanthropic they should give back to society which is desired of all organizations.
Some persons are of different views where business, profit and social conditions are concerned. Well known economist Milton Friedman is of the view that there is only one social responsibility of business and that is to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game.
While one can acknowledge that the primary purpose of a business is about making profits without violation of laws and regulations, one also has to admit that in today’s society, there are many other things that have to be considered. Businesses should not only consider their profits but they should pay close attention to their day to day activities and the effects on the society. Businesses cannot exist without society and vice versa, they are intertwined and dynamically interdependent.
Businesses are crucial members of society and many of them are also significant social institutions. The decisions they make and the actions they take “echo” throughout society. The society is dependent on businesses in the provision of jobs, investment, goods and services produced and the development of new technologies. Businesses have therefore become a profound driver of employment, investment and wealth creation in society.
Businesses may also impact society beyond its obvious economic influence, which depending on the nature it can be deemed negative and in some aspects unethical and immoral which might lead society to now view the company in a negative way.
Being socially responsible creates goodwill and a positive image for your brand. Trust and a good reputation are some of your company’s most valuable assets. In fact, without these, you wouldn’t even have a business. You can nurture these important assets by being socially responsible. It is however, crucial that you devise the right socially responsible program for your business. For a business to be well rounded, it must show that it is guided by the social climate of the country it intends to operate in and not only its profitability. When used properly, it will open up a myriad of new relationships and opportunities. Not only will your success grow, but so will your company’s culture. It will become a culture which you, your staff and the wider community genuinely believe in.