6 Sep 2022


Business Ethics: What Every Business Leader Needs to Know

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As they carry out their operations, businesses are confronted with a wide range of ethical issues. For example, a business may wish to venture into mining. As it does this, the business will need to examine the ethical implications of its mining operations. This business will have to determine how the communities will be affected. The business may also need to consider the impacts of its operations on the environment. This business has to balance the environmental and community welfare concerns with its obligation to shareholders. The example of this enterprise underscores the importance of ethics in business. To achieve success, a business needs to critically examine the ethical situations that it faces. A number of ethical principles and theories are available to aid businesses in their quest to resolve ethical issues. Each of the theories possesses key strengths that make it applicable to various business situations. However, when one examines all the theories, utilitarianism emerges as the strongest ethical framework. Therefore, in their bid to address ethical questions, business organizations should turn to this theory for insight.

Utilitarianism defined 

The basic provision of utilitarianism is that when assessing a situation, one should choose the option that maximizes good (“LC1”, n.d). Essentially, this means that one should always select the option that delivers the most good to the highest number of people. Unlike such other ethical theories as deontology which encourages individuals to refer to moral requirements and laws and totally disregard the impacts of their actions, utilitarianism makes it clear that the consequences should be the entire focus of one’s examination (“LC1”, n.d). In the following discussion, reasons why the utilitarian theory is the strongest are provided. The discussion also explores how this theory can be applied to a wide range of business situations.

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Why utilitarianism is strongest 

To reiterate, utilitarian ethics is concerned with the maximization of good. As has been made clear above, this theory encourages individuals to endeavor to maximize good. The focus that the theory places on the maximization of good is what makes it the strongest among the various ethical theories. Today, businesses engage with a wide range of stakeholders who have competing interests. For example, a business works with shareholders who expect high profits. The business also has employees who desire to be treated with respect and for their welfare to be safeguarded. In its operations, the business may encounter a difficult moral dilemma that forces it to sacrifice the welfare of one stakeholder in order to satisfy another stakeholder. For example, the business may need to force its employees to work long hours for reduced pay so as to maximize profits. In this situation, the utilitarian theory would prove useful. The business simply has to measure the impacts of its decisions on its stakeholders. It should then select the option that causes the least harm while maximizing good. For example, in the case described above, the business should safeguard the interests of 1000 employees instead of pursuing profits that are enjoyed by 10 shareholders. This example shows that utilitarianism is a practical ethical model that businesses can use to resolve dilemmas.

Intrinsic value is one of the basic elements of utilitarian ethics (“LC1”, n.d). When contemplating on the option to select, individuals need to consider the intrinsic value of certain outcomes. Intrinsic value is concerned with the non-material impacts of an action. For example, pleasure is an outcome that possesses intrinsic value. What gives it this value is that it is good in its own sake. For most businesses, the maximization of profits is the primary motivation. The utilitarian ethics challenges businesses to consider outcomes other than profits. For example, instead of being obsessed with maximizing profits, a firm can focus on enhancing the satisfaction of its employees. Basically, as they apply utilitarian ethics, businesses are able to expand their focus beyond the pursuit of profits and other material benefits. This ethical framework reminds businesses that there are certain issues that are intrinsically valuable and that they should pursue.

One of the advantages of utilitarianism can be found in its scope. This theory advises individuals and enterprises to be extensive in their examination of the impacts of their actions. While it is nearly impossible to identify all the possible consequences of an action, businesses need to be extensive and thorough as they predict as many possible outcomes as possible. This is important as it prevents short-sighted business policies. Today, it is common for businesses to engage in practices that deliver benefits in the short term but cause damage in the long-term. For example, a business many decide to dump toxic materials into the environment. This move is beneficial in the long-term because it rids the business of unwanted materials. However, in the long-term, the irresponsible dumping of the waste causes damage to the environment. If it applied utilitarian ethics, the business would have adopted a wider perspective that enables it to predict the long-term effects of its actions. Therefore, as it challenges businesses to ensure that their policies and actions deliver maximum benefit to as many people as possible, utilitarian ethics encourages responsible business practices.

The utilitarian theory has been established as the best owing to its applicability to business in modern times. This theory gains further strength from the flaws in the theories that could serve as alternatives. Deontology and virtue theory are some of the alternative ethical models. Deontology holds that individuals should always follow moral rules and guidelines (“LCT3”, n.d). It dismisses consequences as irrelevant when determining the course of action to take. Herein lies the weakness of this model. To understand why utilitarian ethics is superior to deontology, an example is needed. Suppose that there is a moral rule that requires businesses to always prioritize the needs of its shareholders. Essentially, this rule means that the business should take all necessary steps to ensure that its shareholders remain satisfied. The steps may include violating the rights and welfare of employees. Therefore, since it does not account for the impacts of actions, deontology is fundamentally flawed and simply inapplicable to business situations. The same can be said about virtue theory. This model holds that individuals should endeavor to do the right thing. There are a number of flaws with this model. First, the model does not offer much clarity regarding the meaning of “the right thing.” A business may be confronted with a situation that involves conflict between two or more virtues. Applying virtue ethics, the business will be unable to identify the best option. On the other hand, since it accounts for the consequences of the various options, utilitarian ethics sheds light on ethical dilemmas. Secondly, virtue ethics is somewhat incompatible with modern business. It is true that most firms desire to do the right thing. However, the reality of business means that firms are often forced to engage in underhand, illegal and immoral affairs. For example, as it seeks to get ahead of the competition, a company may steal the trade secrets of its rivals. While the theft of trade secrets is unjustifiably immoral and wrong, one has to remember the intense competition that forces firms to engage in underhand operations. Therefore, since they are flawed and largely inconsistent with the reality of doing business, deontology and virtue ethics enhance the appeal of utilitarianism.

From the discussion above, it is clear that utilitarianism is the strongest ethical model. However, it is important to note that deontology and virtue ethics are not irredeemably inferior. A number of considerations can be integrated into these theories to address the flaws that limit their appeal and applicability to modern business situations. These theories should borrow some of the elements of utilitarianism. For example, while still encouraging individuals and organizations to do the right thing, deontology should also incorporate the consequences of an action. It should remind individuals that whereas virtuous living is commendable, it is equally important to ensure that one’s actions cause no harm. Deontology could also benefit from an incorporation of consequentialism. Instead of dismissing consequences as irrelevant, this model should acknowledge that no evaluation of an ethical situation is complete without an assessment of the impacts of various actions.

That utilitarianism is the strongest ethical model is not in question. However, this theory suffers some flaws and problems that raise serious questions. For example, utilitarianism does not offer any standard for measuring and comparing the impacts of actions. For example, it is difficult to reliably compare the happiness of employees against the satisfaction of shareholders. Determining the impact of business practices on the environment is also difficult and complex. Another shortcoming of the utilitarian model is that it is nearly impossible to accurately predict all the outcomes of an action. A business will encounter serious challenges as it attempts to establish how its decisions, policies and practices will affect various stakeholders. The numerous flaws that utilitarian ethics erode its strength and applicability. However, these flaws are not fatal. The utilitarian model remains superior to the other ethical models and it is applicable to nearly all situations that businesses encounter. In conclusion, utilitarian ethics is based on consequentialism. This model is practical and therefore applicable to business. Using this model, firms are able to assess the impacts of their actions. The model also guides organizations in selecting the model that delivers the greatest benefit to the maximum number of people. Since it guarantees the interests of nearly all stakeholders, firms need to rely on utilitarian ethics for business decisions.


LC1. (n.d).

LCT3. (n.d).

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