Introduction
Business ethics refer to the principles that individuals are expected to follow when dealing with clients in a business environment. Business ethics is a new area of interest to many researchers and a number of them are interested in understanding the corporate social responsibilities of firms in the globalized market. Generally, two theories exist as regards business ethics, one of them being the amorality theory whereby it is argued that business organizations are dishonest and they should never be subjected to ethical values, which means that an enterprise should simply use its resources effectively to maximize profits, as long as the laws of the land are followed.
In this regard, business organizations should never engage in fraud or any other acts that will deprive the client of his or her right to access quality goods and services. The second theory contradicts the first in the sense that it urges business corporations to consider ethics when interacting with members of the public whereby the moral principles should observed. In this paper, the ethical behaviors of business organizations in Finland will be analyzed since they have an influence on the living conditions of the locals. To explain this, theories of morality will be employed since each organization approaches ethics with a certain perspective that is closely related to the famous theories of business ethics.
Description of the Issue
In Finland, ethical codes are mainly related to culture and this has been the problem for many researchers because people rarely differentiate between the two. In fact, the status of ethical standards in the country is very low because people are not concerned. Some researchers in the country underscore the fact that countries, such as Sweden, United Kingdom, and the US are far much ahead since the behavior of business organizations is always monitored closely in these countries.
The main problem is that Finns prefer discussing the problems in business in terms of values as opposed to ethics. Additionally, many people in the country are never concerned with moralistic values and no one has ever wanted to offer a solution on how the global issues could be resolved. However, the issue of ethics is expected to elicit a heated debate in the near future given the rate at which exploration is taking place.
Studies show that a strong correlation between culture and corporate success exist meaning that an organization with an advanced organizational norms and standards is likely to prosper as opposed to the one that simply rely on the laws. Similarly, business corporations that do not adopt cultural management are likely to lose a competitive advantage in the market, which explains the reason companies engage in corporate social activities. In this case, multi-cultural approach provides synergies for business organizations hence strengthening the corporate image. Ethics in the Finnish business environment is a new cultural norm meaning that it plays a critical role for industrial players.
However, he underscores the fact that ethics pose a great challenge to organizations, even though it presents a competitive advantage to those willing to apply it. Scholars employ the terms cultural distance and psychic distance to explain a scenario where culture is related to business and the way it presents difficult situations to the global corporation. If an issue related to power distance emerges whereby the management rely consults other stakeholders arise, cultural distance is said to exist. Additionally if the companies departments rely communicate, a cultural distance might be used to explain the situation. In the global business, this problem is present since regional offices rarely communicate among each other.
Companies are in a position to apply cultural homogeneity in case they are situated in one society with similar cultural features, but this might be a challenge in case it has branches across the borders. Globalization presents a great challenge to organizations meaning that they have to drop cultural approach and employ ethical principles when dealing with global partners. Corporate organizations are forced to introduce new rules in new markets meaning that they have to institute new corporate cultures, which is not possible practically meaning organizations are only left with one option of employing ethical codes since they are applied universally. The main problem is how the Finnish firms are going to cope with the new challenges that globalization present. Studies show that the Finnish government has always responded to global pressures by simply formulating laws to control the operations of businesses, as well as inducing a superior sense of integrity into business activities.
First Global Organization: Nokia Corporation
Nokia is one of the multinational companies operating in Finland and other parts of the world, with specialization in communication and information technology. The organization is headquartered in Espoo and its main products are communication equipments and services, including provision of internet. Additionally, the organization offers games, music, messaging, and media services to the members of the public without any charge. Currently, the firm is believed to employ at least eighty-seven people globally with operations in over one-twenty countries. The company is a public limited company with its shares listed in the country’s stock exchange, as well as the New York stock exchange implying that its profitability is high. Nokia has been able to remain competitive in the global market because of its ability to adopt technology and adoption of ethical codes of various countries.
Apart from subscribing to the moral standards of various countries and professional bodies, it has its own set of ethical codes that are based on social justice and all employees are expected to follow. Social justice means each person should be in a position to realize his or her potential without restriction from the authority. In this case, each person should receive what rightfully belongs to him or her. The organization should be given room to do business without disturbance while it also promises to conduct its activities without interfering with the welfare of others. Finland is one of the countries in the world that respect individual freedoms and rights whereby the government should never interfere with the realization of individual goals. Similarly, the company is concerned with human development and it has never participated in influencing public policies in countries it operates.
In the corporate world, the organization engages in activities aimed at promoting education, healthcare, social security, and the rights of workers. In its payment structure, it ensures that inequality is eliminated through fair distribution of income, which provides an opportunity for each member to achieve his or her interests. If sustainability is to be achieved in development, the environment has to be preserved. Whenever conflicts emerge, it should be the role of the management to resolve them peacefully and no party should be discriminated when handling issues. Based on this belief, the organization ensures that employees are given their rights and the conditions of working have to be better whereby safety is paramount. An employee is not subjected to inhuman conditions that degrade his or her status.
According to the Utilitarian ethics, the organization should aim at implementing policies that will ensure happiness while at the same time reducing suffering. Any decision undertaken in the organization should aim at maximizing utility whereby suffering has to be reduced at all costs. Nokia is one of the companies that have been accused of polluting the environment due to improper disposal of waste products. Disposal of waste products is critical as far as sustainable development is concerned. This means that humanity can only achieve the best if future developmental plans are put into consideration when designing the current strategies. In this case, the organization does not play any role in promoting the interests of the community and its insistence of ethics is skewed because it only applies them in home country and goes against the internationally recognized standards in other countries.
In case the organization wants to boost its competitive advantage and ensure that it remains ahead in the telecommunication industry, it has to consider promoting environmental policies since this would ensure happiness as suggested by Mill. Additionally, the working conditions of all employees should be improved and the cases of discrimination in terms of promotion should be eliminated since this will ensure happiness. Employees working in poor conditions are never efficient and productive because they are concerned with their safety.
Second Global Organization: Nestle Oil
Nestle is a leading Finish Oil Refining company that engages in marketing of oil products. The organization is considered successful due to its diversification strategy, but the strong ethical codes that guide the employees play a role in ensuring that the organization achieves its desired objectives. The company’s ethical codes are supportive of the Kantian ethics, which is one of the deontological ethical theories. Based on the Kantian ethics, people should exercise good will in society whereby the views of each stakeholder are respected and all organizational members should be given equal opportunities to participate in development. In this case, an action should be supported if it obeys the principle of maxim, which means a duty to the moral law. Furthermore, an act should be applicable universally implying that it has to be supported by each person in the organization.
The organization distinguishes between perfect and imperfect duties as regards organizational culture and identity whereby it notes that perfect duties, including telling the truth, are easily made flexible and can be applied in various places across time. Similarly, the best culture and group identities should be applicable across time and places
Conclusion
The study of ethics is critical because of four major reasons, one being the reality that it influences the decisions and practices of organizations. Through ethics, companies, as well as individuals, are likely to generate the best actions that play a role in leading a good life, which is free of suffering. Additionally, ethical codes build a sustainable society that would meet the needs of the future generation. Businesses should be subjected to ethics since they have the potential of harming the individual and the environment.
Production should be done in the best way possible whereby sustainability is given priority. Without ethics, multinational corporations are likely to engage in exploitation of the locals, perpetrate inequality, as well as formulate ineffective policies that aim at dominating the power. In this regard, the actions of companies should be evaluated carefully to ensure that they are consistent with the social justice policy. Competition in the market is rife and if ethical principles are not observed, chances are high that consumers will end up suffering since organizations will simply be concerned with profit making and nothing else.
Fed Management Through Commercial Banks
Monetary actions refer to the steps that are taken by the Fed to ensure stability in the economy and the achievement of other macroeconomic objectives. The actions range from open market operations to bank rates and reserve requirements for a commercial bank. The Fed needs to administer its objective through the commercial banks, and as such, the actions should focus on ensuring and promoting economic growth. The current monetary action is to regulate reserve requirements.
The rationale for taking the action is based on the economic outlook of the United States indicates that private sector investment in technology is on a decline with tourism increasing during the summer. Therefore, the GDP of the country is reflecting an improvement in the various sectors of the economy. Fed responds to the situation prevailing in the economy through monetary actions that respond to the circumstances. The increase in the currency-deposit ratio implies that money is being withdrawn from the banking system reducing the amount of money available to banks to lend out. The populace view bank deposits in sub crisis to be risky. This is because banks are likely to fall during such a crisis. Therefore, money creation by banks through money multiplier is limited, hence a fall in the money supply (Mishkin, 2010).
An increase in the reserve-deposit ratio is negatively related to money multiplier and money supply. The reason is that it will lead to a reduction of money available to banks to lend. The banks in times of sub crisis view money lending as a risky adventure. This is because a considerable number of borrowers are likely to default their debt. During such times, banks prefer holding a high reserve-deposit ratio since they believe it is much safer. The main effect of the two changes will be on the monetary base (MB), this is because of MB= Currency (Money held by the households) plus Reserves (money held by banks). The increase in currency-deposit and the reserve-deposit ratio will mean a decline in the monetary base. The money supply is given, thus, by monetary base multiplied with the money multiplier.
The sub-prime crisis will lead to a reduction in the money supply in the economy. Therefore, a reduction in the money supply will result in a decline in output and a rise in interest rate. The economy through the Fed changes the amount of money in circulation in the economy. When the amount of money supply is shifted, the economy’s equilibrium interest is changed. In this case, a contraction in the money supply will create a left shift of the LM curve, hence a rise in the interest rate. The effect of the increase in interest rate is witnessed by the declining investment rates by the private sector. The result of a sub-prime crisis is the declining rate of capital formation. The private investors look at bank loans as risky and expensive, therefore, as a result, they cannot borrow a huge sum of money due to high interest.
The economy’s Gross Domestic Product will decline due to declining investment and low pace of government spending. The fed is controlling the amount of money available for banks to lend out. The economy will have minimal net export that results in reduced output. The economy faces the problem of the low money supply during a sub-prime crisis. The problem of the low money supply is associated with a low growth rate due to reduced investment because of high-interest rates. The impact of high inflation is also experienced during such a situation. The effects of a crisis can be solved by putting in place a monetary policy (Mishkin, 2010).
The effect of reduced money supply can be tackled by the monetary policy. Tools of monetary policy such as open market operations, reduced discount rates, and reduced reserve requirements will lower the rate of interest of the economy. The government through open market operations will sell securities such as treasury bonds and bills to the populace. This implies that the money held by the public can be reduced. As a result, banks will have money to advance to banks at a lower rate so that investment options can be taken. As a result, a high investment rate will boost economic growth.
The expansionary monetary policy has a positive effect on the challenges that an economy is going through in a sub-prime crisis. The challenges include a low growth rate and skyrocketing interest rates. The policy will reduce the interest rate which a recipe for increased capital investment, hence an improvement in economic growth. The use of discretionary monetary policy is suitable for the reserve bank in control of the prevailing economic crisis. The result of a sub-prime crisis is ballooning inflation rates; the households find it difficult to meet their daily needs. To reduce the high inflation rates, which are closely related to the deficiencies within the financial sector, is to adopt monetary policies that are geared towards reducing the interest rates and stability of commodity prices (U.S. Bureau of Economic Analysis, 2012).
The monetary actions have accomplished the intended effect with; the unemployment rate declining from the rate of 9% in 2010 to 8.3% in the year 2012, due to an increase in job opportunities. Interest rates falling as evident by the increase in borrowing by the private investors; as well as, an indication of improvement in the growth of GDP as evidence that in 2011, the growth rate was 3.7% then improved to 4.7% in 2012.
References
Mishkin, F. S. (2010). The economics of money, banking & financial markets (9. ed. (and the 2. ed. of the business ed.). Boston: Addison-Wesley.
U.S. Bureau of Economic Analysis (BEA). (n.d.). U.S. Bureau of Economic Analysis (BEA). Web.
Canada’s Oil Sands As Ethical Oil Sources
Introduction
Oil is the most important energy source in the world and it sustains modern life as we know it. Maugeri (2006) declares that it is the most vital resource of our time and it provides the energy needed to run industries and power homes. For this reason, nations that produce oil gain significant monetary benefits from its sale. In the past few decades, Canada has emerged as a major oil producing nation (Falola & Genova, 2008). However, Canada’s oil reserves are not contained in underground reservoirs. Instead, they are held in oil sands available in remote sections on the country. To retrieve the oil from the sand, a mixture of water and chemicals is used. The process is energy-intensive and it leads to significant pollution and massive water consumption (Maugeri, 2006).
The negative environmental impact associated with crude obtained from oil sands has led to this product being referred to as “dirty oil”. While conventional oil drilling is detrimental to the environment, its impacts are less than those of oil sands. Nigeria is one of the countries that rely on conventional drilling to extract oil from the ground. Environmentalists consider oil from sources such as Nigeria “clean” while those from Canada’s oil sands are deemed “dirty”. However, Canadian diplomats are keen on promoting the idea of “ethical oil”. Kalyani (2011) defines this as the idea that oil can be ethical depending on its source country. This paper will argue that in spite of the detrimental environmental effect of Canada’s oil sands, they are more ethical than oil from Nigeria.
Why Oil Sands are more Ethical
To begin with, Canada is a democratic country with low corruption levels in both the public and private sector. As such, the democratically elected government is in charge of awarding mining permits to the most competitive companies. Dufour (2013) notes that Canada’s oil resources are exploited in a transparent manner with the government involving the people in the process. The government publishes the financial records for the revenue obtained from the oil sector (Percy, 2012). These records are available for scrutiny by the public and special interest groups. This increases the accountability of the government in handling oil funds. It also ensures that the government uses the oil revenue to improve the economic well-being of the entire nation. In contrast to this, the Nigerian government is plagued by corruption. While the country is a democracy, government officials are not accountable to the people and there is little transparency in the oil sector. Oronto (2004) notes that Nigerian rulers have for decades used the foreign currency obtained from the sale of oil to enrich themselves.
The wealth obtained from oil has fuelled the corruption that has plagued the African nation. The crisis that has characterised the Niger Delta region for decades is attributed to the corruption of government officials and oil companies in the region. Ikelegbe (2009) declares that the greed of the ruling class and the rampant corruption has fuelled the crisis in the area. The disenfranchised communities have therefore taken to engaging in illegal activities to access the oil resources. Armed militias have emerged who vandalise pipelines and siphon off crude oil for sale in the black market. For this reason, some academics refer to some of the oil obtained from Nigeria as “conflict oil”. Obtaining oil from Canada’s oil sands reduces reliance on foreign oil bought from countries with corrupt governments such as Nigeria. This is ethical since
Canada’s oil sands are ethical since they consider the greater good of the communities in the area where the oil is mined. Oil production has an impact on the communities residing in or near the oil producing areas. In Canada, the interests of these communities are given first priority by the government. The Canadian government has respectful relationships with neighbouring communities and consults them before engaging in mining on their land. Dufour (2013) declares that Canada stands apart as “the oil-rich nation where the state does not confiscate your oil fields” (p.12). The oil industry is required to offer compensation in cases where people have to be displaced. Employment opportunities have also increased in the oil producing areas. At the present, the oil industry in Canada is the largest employer of aboriginal people living in the oil producing areas. Canada has also managed to come up with plans for ensuring the future sustainability of communities that depend directly on oil revenue for their economic survival.
Most governments fail to plan for the future which means that the communities are devastated once the oil production ends. This is not the case in Canada’s oil sands. The government has made elaborate plans to ensure that the society continues to thrive after the finite oil resources are depleted. The OECD (2008) acknowledges that the Canadian provincial government has a surplus management plan that includes putting part of the oil revenues into a Heritage Fund. In contrast to this, the Nigerian government does not consider the interests of the communities residing in the oil producing regions. The distribution of oil resources in Nigeria is based on tribalism and ethnicity. Oronto (2004) notes that the minority ethnic groups living in the oil producing areas have been marginalised by the government. While they reside on the land that is rich in oil reserves, these minorities are denied access to the oil revenues.
Finally, Canada’s oil sands are ethical since they abide by stringent environmental regulations set by the government. Pollution has been the most important issue surrounding the extraction of oil from oil sands. According to Levi (2009), greenhouse gas emissions are the most significant environmental problem confronting the energy sector in Canada. The efforts by the country to reduce its carbon footprint have been hampered by the oil sands project. Even as the country works towards reducing its carbon footprint, the establishment of new oil-sands has hampered these efforts. Research indicates that oil sands create up to 20% more carbon dioxide emissions than conventional drilling (Kalyani, 2011). Even so, the Canadian government has been more active in addressing the environmental issues brought by oil production. The OECD (2008) reports that all oil-sand plants that came into operation during 2012 and later were required to meet stringent target based on the use of carbon capture and storage.
According to the Economist (2014), Canadian oil producing companies have invested in emissions-reducing technologies that have led to significant drops in greenhouse gas emissions from oil sands. Kalyani (2011) confirms that Canada has been able to attract investors since the country has above average environment standards. In contrast to this Nigeria has a poor track record in environmental regulation. The oil extraction process in Nigeria is mired by rampant pollution. The government has failed to implement policies that deter oil producing companies from carrying out harmful practices such as gas flaring. Due to this government negligence, regions such as the Niger Delta are heavily polluted. Okonmah (2008) reveals that rampant oil pollution in Nigeria has threatened the lives of citizens who live near the oil-producing areas. Nigerian oil is therefore unethical since it is produced with little concern for the environment. The government does not take adequate action to ensure that oil production takes place in an environmentally friendly manner.
Conclusion
This paper set out to argue that Canada’s oil sands are much more ethical than oil from Nigeria. It began by highlighting the importance of oil resources to the global community. The paper then recognised the environmental impact of oil drilling. Oil obtained from Canadian oil sands has a higher environmental impact. However, the political and socio-economic issues of the country should be considered when judging the appropriateness of an oil source. When these factors are taken into account, Canada’s oil sands are more ethical than oil produced from Nigeria. The Canadian government is accountable to its citizens and there is transparency in utilising oil resources. In Nigeria, the government is corrupt and unaccountable to its citizens. In addition to this, Canada’s oil sands are used to benefit the neighbouring communities as well as the entire nation. Nigeria’s oil does not benefit the communities in the oil producing areas leading to conflict. Finally, the paper has shown that Canada adheres to stringent environmental regulations while Nigeria does not. With this reasons in mind, it can be argued that Canada’s oil sands are more ethical than oil from Nigeria.
References
Dufour, M. (2013). A Nightmare on Maple Street. Dollars & Sense, 304(1), 11-16.
Falola, T., & Genova, A. (2008). The Politics of the Global Oil Industry: An Introduction. Connecticut: Praeger.
Ikelegbe, A. (2009). The Economy of Conflict in the Oil Rich Niger Delta Region of Nigeria. Nordic Journal of African Studies, 14(2), 208-219).
Kalyani, V. (2011). Is Canada’s oil more ethical than Saudi Arabia’s? Christian Science Monitor, 42(3), 10-12.
Levi, M. (2009). The Canadian Oil Sands: Energy Security vs. Climate Change. Toronto: Council on Foreign Relations.
Maugeri, L. (2006). The Age of Oil: What They Don’t Want You to Know about the World’s Most Controversial Resource. Connecticut: Lyons Press.
OECD (2008). OECD Economic Surveys: Canada 2008. London: OECD Publishing, 2008.
Oronto, D. (2004). Oil and militancy in the Niger Delta: Terrorist threat or another Colombia? NY: John Wiley & Sons.
Percy, K. (2012). Alberta Oil Sands: Energy, Industry and the Environment. Ontario: Newnes Publishers.
The Economist (2014). Canada’s Oil Sands: The Steam from below. Web.