Understanding Business Ethics sample essay

Over this task I will be choosing a business and providing brief background information on my select organisation. The company that I have chosen is in a controversial industry and has its fair share of pressure groups, none more so than Governments of several countries. My organisation is in a billion pound industry and in effect manufactures legalised poison.

My selected business is Marlboro, an international billion pound company based in London and is one of the biggest cigarette manufactures in the world. I will examine Marlboro’s mission statement as well as stating its aims and objectives. I will also be explaining the ethical issues the business comes up against in its daily operations.

Marlboro

Marlboro earn billions in profit each year, American customers alone spent an estimated amount of $70 billion annually. It is estimated that Marlboro pre-tax profits for 2006 exceeded $7billion, of which $4.8 billion when to Philip Morris USA whom own the company, Altria Group Inc is the parent company of Philips Morris international and Philips Morris USA.

Marlboro is in the private sector and is a public limited company, its core business activities are to manufacture and market the best quality tobacco products to consumers. Marlboro is a large enterprise business and employs thousands of employees.

Marlboro’s Mission Statement

One of its key strategies is said to align with society as they respond to ‘important stakeholders’ expectations’. Other aims include exceeding consumer expectations by providing tobacco pleasure while ‘reducing the harm’. They also aim to market their products ‘responsible’ and to help people quit smoking. I have extracted the following from the Phillips Morris USA website, in which they state their aims and objectives.

Help Reduce Underage Tobacco Use — Identify, support and develop programs to help reduce underage tobacco use.

Support Reasonable Regulation — Engage with the public health community and government to help set objective standards for reducing harm associated with tobacco products and to establish rigorous regulatory processes for manufacturing our products and communicating to adult consumers.

Meet Compliance Requirements — Meet or exceed the legal, regulatory and internal policy requirements that govern our products and business.

Reduce Environmental Impact — Reduce the environmental impact of our business and promote the sustainability of the natural resources on which we depend.

Provide Tobacco Pleasure/Reduced Harm — Exceed our adult tobacco consumers’ preferences by providing tobacco pleasure and providing products that reduce exposure to harmful compounds in cigarette smoke.

Communicate Health Effects of Our Products — communicate openly, honestly and effectively about the health effects of our products.

Provide Cessation Information — Help connect smokers who have decided to quit with expert quitting information.

Market Our Products Responsibly — Build relationships between our brands and adult tobacco consumers while using tools designed to minimize reach to unintended audiences.

Source: http://www.philipmorrisusa.com/en/about_us/

Ethical Issues

Marlboro needs to consider its ethical issues in its daily operations; they manufacture and sell millions of cigarettes every single day earning the company billions worldwide. Yet they seem to show a lack of corporate social responsibility, the long term effects of smoking are well documented and scrutinised. They produce an addictive drug and a harmful product. The tobacco industry has put a strain on the health services which costs billions in tax and significantly reduces the life expectancy of those whom smoke and effect people around smoke.

Corporate governance The key men of Altria group, inc are Louis Camilleri, CEO & Chairman and Dinyar Devitre CFO. The Altria group is based in New York and is in the tobacco, food and beverages industry, they employ 199,000 people and their revenues of 2006 were $101.407 Billion.

Corporate social responsibility Marlboro and other tobacco companies are not doing in enough to help people to quit smoking and are not doing enough to ease the strain on the health services. Marlboro says they aim to support ‘reasonable’ regulations set by government and public health services, to reduce the risks of smoking. Yet for a billion pound company they are investing ‘loose change’ to research and develop their cigarettes to ensure a less toxic outtake when smoked. For a billion pound industry they are not doing much to ease the strain on the health services and government.

Environment Marlboro products are harmful to the environment when they are lit; they release carbon monoxide to the environment and contribute to global warming. Global warming causes the sea level rise as a result of melting glacier and increased temperature. Marlboro’s activities are contributing to global warming which is damaging the environment and as a result is causing floods all over the world, damaging the livelihoods of millions.

Sustainability Marlboro produce one of the most harmfully products, not only to those who smoke it but it effects the whole world. The factories which produce the tobacco are one the main polluters in the worlds, they emit vast amounts of CO2 emissions in the atmosphere. They affect the world and contribute to global warming; as a result innocent slow developing countries are feeling the affects. Marlboro earn billions yet when countries and coastlines are effected by global warming none of the tobacco companies are seem to help.

Human rights Marlboro’s production plants are one of the most harmful emitting plants in the world. The staffs who work at plants are at an increased risk, as they are exposed to harmful products every day. Marlboro is abiding by the health and safety laws in production plants, but the health implications can be devastating. The staffs that work at Marlboro plants are likely to have decreased life expectancy and Marlboro is not spending enough on research and development to develop its tobacco to make less harmful.

Corruption In 2001 The European Commission took Philips Morris and another tobacco firm to court over allegedly helping smuggle cigarettes into Europe, evading billions of tax dollars. The European Commission launched the action after claiming that the firms were involved in selling contraband cigarettes. The European Commission wanted compensation and wanted to force a change in the law. However a New York court ruled that the European Commission’s budget did not reduce by any such smuggling activity and as a result the case was thrown out. Phillips Morris vice-president said after the case “The issues of contraband cigarette smuggling and counterfeit cigarettes are as great a concern to Philip Morris as they are to governments”. Source: BBC News

Trading fairly Marlboro has several competitors which operate in similar, if not exactly the same way. Its trades on a level playing field, however whether it trades fairly to customers and consumers is another matter. It sells an addictive drug which slowly and painfully kills its consumers.

Legal and regulatory compliance The Government is not doing enough to impose sanctions on tobacco companies and enforcing them to produce less toxic products as the Government has its own hidden agenda. The Government along with the NHS have launched a million pound advertising campaign to show the risks of smoking hoping it will deter youngsters from smoking, yet at the same time they want the cigarette companies to make huge amounts of profit each year so that Government can tax them. On the other hand Government has put laws in place to protect the way in which the products are advertised. They have also banned smoking in public spaces to reduce second hand smoke.

Marlboro needs to ensure that they discourage youngest from smoking, the company claims it is working with organisations to prevent underage smoking (which is an important revenues sources of the tobacco industry) by supporting ‘reasonable’ laws and regulations. Some of which is laughed off by pressure groups, as the spoof picture on the right indicates the scale of the problems the tobacco industry has.

Wider environment Marlboro’s production plants harm its staff and the wider environment. Surrounding villages and habitats are at a greater risk to emissions, as they are being emitted by the factory plants which makes millions of cigarettes a day. Marlboro is money driven company and its profits come at a cost.

Business practices Marlboro business practices are unethical as they are a billion pound corporation which seem to be doing little to improve its practices. They are not doing enough to improve their products to make it less harmful to the environment, the consumers and the health services. They are not doing enough to ensure that their products are targeted to the correct age groups and to deter underage smoking regardless of what their mission statement says.

Working conditions This is similar to the human rights violation; they work in one of the worst unhealthy working conditions in any industry. Yet they get paid pennies in comparison to how much profit the company makes. The employees are underpaid and exploited; they are forced to work under toxic conditions and are exposed to harmful products every day.

Individual ethical responsibilities Management of Marlboro needs to re-evaluate whether the individuals of its hierarchy are acting ethically and responsibility. They need to cut out the money driven company image and take into account the ethical which I highlighted in my assignment.