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MGT 216 Week 5 Learning Team Assignment Ethical Organization Profile

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What is business ethics?
There are many different definitions of business ethics. In general, the term is used to
mean a form of applied ethics in which a system of ethics and morality is applied in the business
world. The exact application of business ethics will differ from organization to organization, and
place to place. Different organizations deal with different stakeholders, different clients and
customers, and different dimensions of the work world, industry, and market. The way business
ethics must be applied is determined by the nature, mission, purpose and goals of a given
company. The universal purpose of business ethics is to ensure that companies treat their
workers, partners, clients, and any other involved shareholders or stakeholders with ethical and
moral integrity. Business ethics used to be taken for granted and assumed, almost as an
extension of the personal ethics of those involved in the business. In more recent years,
however, following different issues including the 2001 Enron scandal, individuals and businesses
have focused more on analyzing and formalizing business ethics (cf WiseGeek, retrieved 2010).
A Model Organization: Integral business ethics in terms of social issues, legal issues, and
profit.
Taking a fictitious restaurant food supply organization called The Ultimate Deal, as an
organization that serves as a model of business ethics, the practical implications of business
ethics can be explained. The Ultimate Deal, as a restaurant supply organization, deals with
several different organizations and stakeholders. It has its clients – the restaurants. It also has its
own suppliers – the butchers and farmers that work together with it. The organization has its
own employees, and the executive board. It also has its main investors, and other minor
shareholders. Ethics must be applied in the organizations dealings with all of these stakeholders.

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The organization must balance and merge honest business ethics with its other social and legal
realities. Ultimately, the organization exists for profit. There are times when dealing unethically,
lying, for example, about the quality of the meat sold in order to raise the price, will reap greater
profit than the negative consequences – law suit and fine – of the unethical behavior. In a model
organization of business ethics, such as The Ultimate Deal, the ethics must come first.
Ethics should not be seen as a challenge to profit, but should be balanced with profit.
Such an organization, instead of lying to one stakeholder, such as its customers, to make extra
profit, can market itself in the name of business ethics, and gain the same profit and support from
a legitimate source – integrity – rather than through dishonesty. At the same time, in order to
balance ethics with the companies social responsibility to live up to its name and identity, its
economic responsibility to make profit, and its legal responsibility to comply with existing laws,
tax systems, etc., the organization should make sure it doesn’t over commit or aim to high. A
company that commits or sells itself at a standard that cannot be met by its means places itself in
a situation where it either faces social and economic failure because it can’t live up to what it has
advertised, or it resorts to unethical business behavior.
The Ultimate Deal is able to balance these issues by careful and self-analysis, realistic
projection, and honest advertising. Before committing to something or advertizing a certain
quality of product for a certain price, the company reviews its budget and resources, weighs the
amount of initial investment needed, and compares it with the expected profit. If the investment
costs far more than the expected profit, the company doesn’t proceed with the plan. If, on the
other hand, profit is expected to exceed investment, the company proceeds. It does not, however,

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over commit and advertise, but uses a pilot program, which can be controlled and monitored
until the initiative is fine-tuned and proven to have worked. For example, if The Ultimate Deal
thinks it will profit from selling higher quality steak at the same price as its current quality steak,
it calculates the amount of money that will be lost by the investment, and compares it to the
profit that will be reaped by an increase in customers and purchases. The profit outweighs the
investment, so the organization puts out the offer in one city, for a limited time period. If it
succeeds, it then extends the practice to all chains. If there is a loss, the company stops after one
month. It has fulfilled its commitment to its customers and dealt ethically on all sides, while
ensuring that the ethics and commitment doesn’t have a strong negative impact on the company’s
ultimate goal, which is profit.
The Ultimate Deal: A Code of Ethics
The Ultimate Deal has a formal code of ethics that expresses the expectations and
application of business ethics toward all stakeholders. The topics include legal ethics – the need
to act honestly and ethically faced to legal matters including regulations, inspections, taxes, etc.;
ethics in dealings toward investors, keeping them informed and involved; ethics toward
customers, ensuring responsibility, reliability and coherence, providing what has been committed
to; ethics toward the press in terms of advertising and press releases; ethics toward employees
including rights and duties and ethics toward the executive officers, both in terms of how they
should be treated and what their duties are. The code of ethics is distributed to all shareholders.
Each category of shareholder (executive, employee, investor, customer…) receives a verbal
explanation of the ethics that apply to them, and have the opportunity to voice any concerns or
questions. Ethics applied to customers are also posted in the appropriate customer service and

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