Class Section

Class Section




CriticalAnalysis Topic: Why Ethical Problems Occur in Business


  • Defined as the individuals or organizations moral distinctions about what is right and wrong (Lawrence, &amp Weber, 2014).

  • Businesses make decisions that are influenced significantly by the culture of the organization or the company.

  • These decisionsare ethical values which are foundational set of principles that establish the expected behavior for the business (, 2015).

  • Ethical behavior describes the activities that are consistent with the expected standards of moral values and principles within the business world (Lawrence, &amp Weber, 2014).

  • Ethical problems arise in any business organization as a result of conflict of interest, misleading advertising and lack of integrity.

  • It is facilitated by the individual’s moral intuition, self-deception and “in group” bias.

  • Individuals within business environment right immediately to moral dilemma, making a quick decision that leads to wrong moral decisions.

  • The employees often do not perceive ethical situation in the right perspective thus act unethically (, 2015).


  • Ethical problems do occur in any kind of business or company, owing to the complex global environment of the 21st century (Mathews, 2009).

  • All businesses of every size experience different range of ethical issues and it is generally widely occurring practice globally (Frecka, 2007).

  • Several companies has been affected by ethical problems which ultimately has led to their collapse, such companies include Trendon financial investment company on wall

Street(Mathews, 2009)

  • Ethical problems vary with different business depending on the culture within a given organization or company.

  • The ethical challenges have become a major problem to the transparency and operation of different firms all over the world.

  • Business ethics was introduced as an independent field in the 1970s to mitigate extensive occurrence of ethical problems in businesses (Frecka, 2007).

  • Ethics facilitate the firms’ smooth operations but on the contrary several cases of ethical problems have been reported.


  • The ethical issues occur from large to small businesses, mainly involving individuals due to employee behavior (Clement, 2006).

  • Employee behavior include:

  • the manner in which a manager handles a claim of harassment

  • the manner in which a manager can conduct promotion to a given employee

  • The unethical employee behavior arises such as when a manager discriminates against an employee because of his/her religion, gender or ethnicity (Clement, 2006).

  • It arise due to compromise on integrity and trust such as:

  • When a business fails to conduct the business matters with an expected commitment and honesty when interacting with customers.

  • The business is not committed with upholding its ethical business practices (, 2015).

  • It result from diversity issues because of different cultures and people such as:

  • When a company recruitment targets only a particular culture or group of people

  • Failure of the organization to provide equal training opportunities to its employees

  • The organization value the contribution of certain employees (, 2015)


  • Champions of ethical values (, 2015):

  • Mary Beth Armstrong- highlighted ethics in public accounting through her books and a number of articles

  • John R. Boatright – has published several professional journals on business ethics

  • Norman E. Bowie-as a professor at the university of Minnesota and later London Business School contributed immensely to Business Ethics through his publications (Blackwell, 1999).

  • Joanne B. Ciulla- made several publications on philosophy of work, business ethics and leadership studies,

  • Richard T. DeGeorge- made significant contributions on Ethics in Business as a director of the international center for Ethics in Business at the University of Kansas (, 2015).

  • Joseph R. Desjardins- contributed to contemporary issues in business ethics and environmental ethics as a distinguished professor (, 2015).

  • Bentley University Center for Business Ethics-fosters trust and integrity in business

  • Center for the Study of Ethics In the Professions- promote teaching and research on practical moral problems in Business (, 2015).


  • 2000- Enron company engaged with unethical accounting activities

  • 2003-Monsanto was involved in negative environmental ethical issues

  • 2005- Walmart was accused of anti-union claims and discrimination scandals

  • 1977- Beechnut Company was involved in Apple Juice Scandal

  • 2002-Arthur Andersen conducted unethical auditing practices.


  • Business ethics was initially used at the beginning of 1970s in the United States

  • The companies developed ethical standards in the late 1980s and beginning of 1990s.

  • Enron scandal, formerly known as New York Stock Exchange is based in the United States.

  • Monsanto international company, based in the United States affected its subsidiary companies when it engaged with unethical environmental practices.

  • Wide range of ethical problems in several business has been reported in many countries such as:

  • Eritrea

  • Libya

  • Uzbekistan

  • Turkmenistan

  • Iraq

  • South Sudan

  • Afghanistan

  • Sudan

  • North Korea

  • Somalia

PHRASES:(Lawrence&amp Weber, 2014)

  • Ethical dilemmas- situation with which an individual is faced with a difficult moral decisions

  • Aspirational-a striving to attain the highest ethical standards

  • Benchmarking- the aspect of comparing a particular set of ethics to that initially developed best practices

  • Character Education- to assist individuals creates knowledge to live according to the set ethical standards.

  • Code of conduct or Code of ethics- the main reference and guide for users to promote the daily decision making process.

  • Code of Ethics- used to convey the values of an organization, the commitment to set standards.

  • Conflict of interests- when an individual is at a position where he/she is required to exercise the judgment on behalf of others (Lawrence &amp Weber, 2014).

  • Corruption-the abuse of integrity when undertaking public activities


Thecountries in red experience worst cases of ethical problems comparedwith those in green


  • When ethical problems are highlighted it helps brings about necessary focus to address them (Lawrence &amp Weber, 2014).

  • Helps brings about identification of particular ethical problem in business operation

  • Set the implementation of the right course of action and then following its progress

  • The ethical problem helps indicate particular essential principles affected Small Business. (, 2015).

  • It indicates threats to business operation when abuse of integrity and ethical standards set by an organization.

  • Those found guilty of ethical violation will be liable to the lay down penalties (, 2015).


  • It leads to legal issues once an individual violate the establish code of ethics

  • The penalties involve hefty fines and other penalties (Nielsen, 2008).

  • It impact negatively the performance of employees of a the affected company

  • Ethical problems affect the employee relations with the management (, 2015).

  • Usually resulting in the tension among employees

  • Upon the realization by the public, the credibility of the company will be affected losing significant customer base in the process (Nielsen, 2008).

  • Loses huge sum of money when the employees undertake unethical behaviors


  • Numerous steps have been put in place to ensure ethical problems are prevented from occurring (Olsen, 2001).

  • Businesses has advocated and enhanced the adherence of codes of ethics

  • Through the prosecution of the guilty individuals, it has helped served as model to prevent further occurrence

  • Many organizations have been put in place to champion the importance of upholding ethical standards (Ryan, 1992).


  • References cited,.(2015). The importance of ethics in business – Ethical businesspractices – Cadbury Schweppes | Cadbury Schweppes case studies andinformation | Business Case Studies. Retrieved 23 September 2015,from

Clement, R. (2006). Just howunethical is American business?. Business Horizons, 49(4), 313-327.,. (2015). Ethics ResourceCenter. Retrieved 23 September 2015, from

Frecka, T. (2007). Ethical Issues inFinancial Reporting: Is Intentional Structuring of Lease Contracts toAvoid Capitalization Unethical?. J Bus Ethics, 80(1), 45-59.

Lawrence, A. T., &amp Weber, J.(2014). Business and society: Stakeholders, ethics, public policy(14th ed.). New York, NY: Richard D. Irwin, Inc. ISBN: 9780078029479.Chapter 4 pg 75

Mathews, J. (2009). A pattern ofEthical/Unethical Conduct in Business Situations. SSRN ElectronicJournal.

Nielsen, R. (2008). Varieties ofWin–Win Solutions to Problems with Ethical Dimensions. J BusEthics, 88(2), 333-349.

Olsen, J. (2001). Environmentalproblems and ethical jurisdiction: the case concerning Texaco inEcuador. Business Ethics: A European Review, 10(1), 71-77.

Ryan, L. (1992). The New Poland:Major Problems for Ethical Business. Business Ethics: A EuropeanReview, 1(1), 9-15.

Small Business –,. (2015).What Are the Major Ethical Issues Business People Face?. Retrieved 23September 2015, from,. (2015). Why EthicalProblems Occur in Business – Video &amp Lesson Transcript | Retrieved 23 September 2015, from