An Evaluation: The Role of Corporate Social Responsibility Efforts of British Petroleum (BP) towards their Global Business Operations

Introduction

The first chapter focuses mainly on the issue that the study explored which is the role of corporate social responsibility in the operation of British Petroleum. Main areas are covered herein including background, the problem, aims and objectives and importance of the conducted study. In this chapter, the researcher established the dimensions related to corporate social responsibility. 

Background of the Study

As contemporary organisations move into a more ethical global business environment, trickling down of corporate social values and mission to the greater public is now deemed a requirement. Regardless of corporate beliefs and culture, the economic or productive value of modern organisations is nonetheless derivative from its worth and its extension of organisation’s profundity for wealth-profit index by which serves as the competitive measure to sustain its very existence (Henriques, 2003). In simpler terms, corporations are now perceived in the forefront to promote sustainable social development by sharing its resources for the projects, programmes and initiatives which have a social cause. Dubbed as corporate social responsibility or CSR, companies at present are obliged to act responsibly and expected to be sensitive about ethical issues (Carroll, 1979, p. 500). 

Businesses around the globe are continuously developing to respond to the needs of their customers. It is very vital for them to develop creative ways that will maintain their competitiveness.  The corporate world is characterised by paramount restrains, high demands and expectations on productivity, and excessive competition where management members necessitate the familiarity and importance of business ethics and social responsibility. Considering the trends in the corporate world, many employees are pressured to cut corners, break standards and rules, and engage in other forms of questionable practices so as to do away with a number of inconveniences and achieve outcomes the fastest way possible while neglecting the provision of appropriateness and fairness. With respect to this, this paper will evaluate and discuss the concept and role of business ethics and social responsibility in application to the business practices of British Petroleum or simply BP.

Brief Background of British Petroleum

Headquartered in London, BP Plc is considered as one of the world’s largest energy companies which provide consumers with fuel and energy as well as petrochemical products. Evidently, British Petroleum is one of the six “supermajors” or the International Oil Company (IOC) along with ExxonMobil, Royal Dutch Shell, Chevron Corporation, ConocoPhilips and Total SA. Since operating an oil company is too risky a venture, British Petroleum embarked on a frenetic growth strategy through continued divestiture and merger and acquisition. BP plc therefore transformed from being a local oil company into a global energy group wherein over 80,000 people are employed to main its operation on more than 100 countries worldwide. Today, there are three core strategies that British Petroleum commits itself such as exploration and production, refining and marketing and alternative energy.

Currently, there are six brands that make up BP plc namely BP, Castrol, Arco, Aral, am/pm and Wild Bean Café (BP online, 2010). BP plc, as an organisation, also claims to be structured for success through the two key business segments which are the exploration and production and refining and marketing and the alternative energy business known as the BP alternative energy. In line with these strategies are different business activities that include finding, extracting and moving oil and gas, making and selling fuels and products, generating low carbon energy and working responsibly. Of all these activities, working responsibly embodies BP plc’s commitment on the betterment of communities where it operates. Roughly, BP plc is operating in Africa, Asia, Australasia, Europe and North and South America (BP online, 2010).

BP plc is positioning itself to be a frontrunner in the future pertaining to the need to meet the world’s continued demand for fuel, energy and petrochemicals. BP plc intends to play a central role in creating long-term options for the future in new energy technology and low carbon energy businesses. Likewise, BP plc is enhancing its capabilities in natural gas which is regarded to be a vital source of relatively clean energy. This is more so because the goal is to transition to a lower-carbon economy and beyond. Desirably, BP plc wants to be recognised as a “green” company which consciously puts initiatives to eradicate climate change at the centre. In essence, BP plc is currently operating through environment-friendly technologies.

Statement of the Problem

Organisational characteristics unique to BP plc is opposing, however, wherein on one hand BP plc is recognised to be a key figure in addressing climate change and on the other hand BP plc is also accused of greenwashing because of its less environment-friendly operations. What is clear though is that BP plc is responsible and accountable for serious oil scandals in the history with the Gulf of Mexico oil spill as the most recent despite the ongoing initiatives to achieve sustainability. With the oil scandals that are glooming the confidence of the consuming public as well as the investors, BP plc can only rebuild its image while focusing towards becoming a green oil company. The last may seemed to be impossible for an oil company to green its entire operation. This may be also the reason why BP plc is likely to greenwash the media and the general public.     

In retrospect, BP plc was caught and perceived to be involved in “greenwashing” when in July 2006, after the media had discovered a 270,000 crude oil spill in Alaskan tundra, the company admitted that it is facing criminal charges. Relative lack of press coverage regarding the spill is a proof that BP plc had successfully greenwashed the image it is communicating with the public. BP plc was also subjected to criticisms after it was proven that it is involved in environmentally unsound practices. While BP plc is publicly affirming its commitment to investing in alternative energy sources minimally, in reality, majority of its investment is devoted to fossil fuels (Monbiot, 2006; Frey, 2007; Milmo, 2007; Green, 2007).        

In lieu with this, this research answers the following queries: 

• What advantages are there for a company to be ethical? 

• How important is it for British Petroleum to consider corporate social responsibility and be ethical?

• How can unethical actions be prevented through the introduction of the necessities of corporate social responsibility efforts in British Petroleum?

• How can BP implement corporate social responsibility in its strategy?

Aims and Objectives

The study evaluates the corporate social responsibility efforts of British Petroleum (BP) towards their global business operation. Generally, the complexity of today’s global market is different from the past years but still, BP’s business efforts still shows positive impact to their consumers. To determine the various challenges that the company managed to solve is however, might contribute in the company’s action in their formulation of strategies. Through learning the strategies being implemented within the organisation, there is a positive approach on what are the factors that might contribute to the long-term success of the company. With this, the following are the objectives of the study.

• Examine the corporate social responsibility efforts associated with the growth of British Petroleum (BP).

• Understand how BP has developed and grown into very success business despite of the issues relating to business ethics. 

• Determine how BP achieved growth and development through the process of efficient corporate social responsibility.

Organisation of the Thesis

This research study will be divided into five chapters in order to provide ease and consistency on the discussion of the topic. The first part will be discussing the problem uncovered by the researcher and provide sample background on the topic. The chapter will constitute an introduction to the whole research study, the statement of the problem in order to present the basis of the study, a discussion on the scope of its study, as well as its effects to individuals and its significance to the society as a whole. The second chapter will be discussing the relevance of the research study in the existing literature. It shall provide studies on the background of the company, corporate social responsibility efforts, and environmental issues. After the presentation of the existing related literature, the researcher shall provide a synthesis of the whole chapter in relation to the study.

The third part of the research study shall be discussing the methods and procedures used in the study. The fourth chapter will be an analysis of the collected information from the secondary sources. Secondary Information assessment will be made in order to uncover BP’s corporate social responsibility stance and to address the statement of the problem noted in the first chapter. The last chapter shall comprise of three sections, namely, the summary of the findings, the conclusion of the study, and the recommendations. With these three portions, this chapter will be able to highlight the implication of the findings in relation to the data obtained.        

Literature Review

According to Robbins & Judge (2007), many employees are confronted with instances where they need to define and decide right and wrong conduct. The characteristics of good ethical behaviours have never been clearly projected in the recent management literatures where the line that differentiates right against wrong conduct has become even more blurry. Managers and leaders respond to ethical behaviour issues (De Mesa Graziano, 2002). 

It is provided that when analysing the role and meaning of ethics and social responsibility from the internal and external perspective of a company, Kline, (2006) states that, 

“There is a potential problem ...with attaching the duty of managers to the specific desires of shareholders. If anything, moral constrains are meant to constrain desires. Desires are fickle and not always moral”. 

Kline’s statement holds veracity and openness provided that business ethics and social responsibility is concerned. In a globalised economy, in both local and international setting where tough competitions occur among businesses, companies are exploiting the benefits of social responsibility and business ethics. These social activities: include charitable contributions, discounts to senior citizens, expenditures on employee alcoholism and substance abuse treatment, responses to customer complaints, product warranties, processes for exchanging purchases, community service in volunteer or governance capacities, employee education, child care or flexible hours for employees with children, advertising or promoting community events, sponsoring sports teams, recycling, special services to the handicapped, and so forth (Suderman,  1999).

Global corporations in which BP belongs view social responsibility as a corporate investment that will result in a long-run corporate profit and not a corporate expense. According to Cotton (1998) businesses supporting social responsibility activities claim that it is in the best long-run interest of the business to become intimately involved in and to promote and improve the communities in which it does its business.  Moreover, McCarty & Bagby, (1990) also argued that it can and should improve the corporate and local image of the company, and it is in the stockholders best interest. Further, companies believe that by making communities a better place to live in, it can entice superior and happier workers to the company who in turn will put out better products and increase profits (Michalos, 1995). However, it is important to point out that the primary reason why businesses turn into socially responsible activities is to maximize their profits; public interest comes in second.

The question now is why CSR is relevant today for companies. The answer lies in the four identifiable trends of CSR, which seem likely to continue and grow in importance: increasing affluence, changing societal expectations, globalisation and free flow of information and ecological sustainability. As customers are increasingly endowed with the access to various products and services, responding to affluence is now a strategic objective hence putting a premium to a trusted brand was realised. These customers expect more from the companies where they would afford products and services, implicating public trust and public confidence in the ability of companies to restrict and control own corporate excess. Media, further, are empowered in bringing the public the information of the lapses in CSR. Such situation also empowers activist groups and like-minded people in spreading messages and providing the means to coordinate collective action. Evidenced proved that earth has ecological limits with impacts on the environmental responsibilities that are likely to be criticised and penalised when not performed thoroughly (Werther and Chandler, 2006, pp. 19-20; McComb, 2002, p. 5).      

According to Epstein (1987, pp. 99-102), corporate social responsiveness focuses on the individual and organizational processes for determining, implementing, and evaluating the firm’s capacity to anticipate, respond to, and manage the issues and problems arising from the diverse claims and expectations of these stakeholders. The moral argument for CSRstates that CSR ‘broadly represents the relationship between a company and the principles expected by the wider society within which it operates’ (Werther and Chandler, 2006, p. 16; Lea, 2002, p. 10).

Word Business Council for Sustainable Development defines social responsibility as the continuing commitment to behave ethically and contribute to economic development while also improving the quality of life of its workforce, their families, and the local community and the society at large. Corporate Responsibility Index claims that social responsibility is achieved when a company has effectively and sustainably built a lasting, meaningful relationship within its sector where it belonged and its immediate community (Scott, 2007). In other words, social responsibility concerns the social environment and the ever-changing social contract. Importantly, the underpinning is that a company should consider the societal impacts of its decisions and actions. Sims (2003, p. 43) argued that companies must act to protect and improve the welfare of the general public. The businesses must aim not only on organizational effectiveness but on existence to address the needs of society.    

As social responsibility is intertwined with the issue of accountability, it can be considered as both critical and controversial. Critical because a for-profit company could be the largest and most innovative part of any free society’s economy as it can drive social progress and affluence. However, it is also controversial because the question – what is the purpose of business within a society? – remains to be unanswered (Werther and Chandler, 2006, p. 8). Having thought deeply of such a question, striking a balance between corporate and social responsibilities should be a strategic focus. To become accountable, a company has economic, legal and ethical responsibilities wherein not only the company has to make profit in order to survive, but the company is also obliged to its stakeholders to maximise earnings and operate efficiently, complying the best of the standards. The underpinning is that a company should provide a quality, sustainable living to both internal and external stakeholders.

Speaking of social contract, social responsibility transcends beyond mere obligation between a company and its workforce. Instead, the social responsibility of a company also extends to individuals, groups and other organisations, government and the society as a whole, comprising the stakeholders of a company. Sharplin (1985) states that social responsibility refers to the set of written and unwritten rules and assumptions in a corporate manner and these rules are applied to its immediate community including the people within that community. Gossy (2008, p. 6) also identifies primary and secondary stakeholders and active and passive stakeholders. Primary stakeholders have a vital in the company while those secondary stakeholders may not actively participate but the company could still exist. People who seek to participate in the activities of the company are considered active stakeholders such as managers and employees. Most shareholders, the government and the local communities are, in contrast, considered as passive stakeholders.

Proaction is considered as the highest level of responsiveness to social issues where companies actively seek to improve and contribute to society. Companies with proactive philosophy will try to carry out discretionary responsibilities (as cited in Harila and Petrini, 2003, p. 32). Proaction is an approach to corporate social responsibility that includes behaviours that improve society. Organizations that assume a proaction strategy subscribe to the notion of social responsiveness. Proaction according to Carroll (1979, p. 501); Joyner and Payne (2002, p. 298) involves actively addressing specific concerns of stakeholders and anticipating social problems before they arise or are officially recognized, and developing strategies to deal with these issues.

Lane, Mendenhall and McNett (2004) state that organisational values are found on vision and mission statements which drive strategy. Strategy and ethics are linked through the idea of purpose. Managers understand purpose in quite personal ways as a guide for their personal action. For the mutual benefit of the organisation, managers’ actions are activated by agreement with others especially that correlates with the organisation. It would be necessary to note that managers are put in their position to diffuse responsibility. Managers do understand the purpose of their organisational activities in terms of their own personal engagement with and responsibility for them. Likewise, managers also understand purpose as it applies to their connection to others, in and beyond the organisation, people who agree to responsibilities related to their shared goals. The purpose of an organisation is ethical in nature and is influenced by culture. When such assumption is left in tacit, misunderstandings could arise (Sharma and Bhal, 2004). To be effective then, values should reside at the operational levels in the thoughts and actions of those who implement the strategy whom are the managers. It is important then for managers to understand others and own implicit culturally influenced ethical assumption. 

Organisations are often structured as a collection of functions and roles that have decentralised operational responsibility. Holian (2002) relates that managers are then responsible on performance of subordinates’ performance. The diversity in functions and roles could have challenging ethical issue. Once the demarcation among these functions and roles became an issue, managers could miss the opportunity to make ethical decisions. Managers are in a response mentality as moral action may be a part of the problem’s solution of a different order than ethical decision-making. Because organisations are made integrated, managers are confronted with the challenge of the tendency to be problem-oriented which may confound ethical problems in the organisational level (Carroll, 1990).  

According to Casali (2007), organisations may encourage managers to be unethical in forceful and implicit ways via disincentives. The reward of quantity over quality is an example of this as well as the bottomline pressure for profits at any cost, open door policies but closed door practices, punishment for reporting policy violations, promotion of managers known to be less ethical and patterns of deception throughout management. As such, the way performance maybe measured may put pressure on managers to act for the short term rather than to choose what might be the right approach for the organisation in the long run. Hence, the lesson for managers is to set and manage reasonable performance expectations (Vardi and Weitz, 2004).  

References

BP 2010, About BP, retrieved on 21 September 2011, from http://www.bp.com/marketingsection.do?categoryId=2&contentId=7013628.

BP 2010, Environment and Society, retrieved on 21 September 2011, from http://www.bp.com/sectionbodycopy.do?categoryId=2311&contentId=7060022.

BP 2010, Investors, retrieved on 21 September 2011, from http://www.bp.com/investorhome.do?categoryId=132&contentId=2004195. 

Carroll, A B 1979, ‘A Three Dimensional Conceptual Model of Corporate Performance’, Academy of Management Review, vol. 4, no. 4, p. 500.

Carroll, A B 1990, ‘Principle of Business Ethics: Their Role in Decision Making and an Initial Consensus,’ Management Decision, vol. 28, no. 8. 

Casali, G L 2007, ‘A Quest for Ethical Decision Making: Searching for the Holy Grail, and Finding Sacred Trinity in Ethical Decision Making by Managers,’ Social Responsibility Journal, vol. 3, no. 3, pp. 50-59. 

De Mesa Graziano, C. (2002). ‘Promoting Ethical Conduct: A Review of Corporate Practices’, Strategic Investor Relations, Fall, 29-35

Epstein, E M 1987, The Corporate Social Policy Process: Beyond Business Ethics, Corporate Social Responsibility and Corporate Social Responsiveness, California Management Review, vol. 29, no. 3, pp. 99-114.

Frey, D 2007, How green is BP? New York Times. 

Green, J 2007, BP: The Big Polluter, Green Leaf Online. 

Harila, H and Petrini K 2003, Incorporating Corporate Social Responsibility: Case Studies of Four MNCs, Lulea University of Technology.

Henriques, A 2003, ‘Ten things you always wanted to know about CSR (but were afraid to ask); Part One: A Brief History of Corporate Social Responsibility (CSR), Ethical Corporation Magazine, March 26.

Joyner, B E and Payne, D 2002, ‘Evolution and Implementation: A Study of Values, Business Ethics and Corporate Social Responsibility’, Journal of Business Ethics, vol 41, pp. 297-311. 

Kline, J. (2006). Ethics for International Business, Routledge.

Lea, R 2002, ‘Corporate Social Responsibility: IoD Member Opinion Survey’, The Institute of Directors, UK. 

McComb, M 2002, ‘Profit to be Found in Companies that Care’, South China Morning Post, April 14.

McCarty, E.W. & Bagby, J.W. (1990). ‘The Legal Environment of Business’, Irwin, Boston, MA, in Fox, J (2000) ‘Approaching managerial ethical standards in Croatia's hotel industry’, International Journal of Contemporary Hospitality Management, 12: 1, 70-74

Michalos, A.C. (1995). A pragmatic approach to business ethics. Thousand Oaks, California: Sage Publications, Inc. 

Milmo, C 2007, The Biggest Environmental Crime in History, The Independent. 

Monbiot, G 2006, Behind the spin, the oil giants are more dangerous than ever, The Guardian, London. 

Robbins, S.P. & Judge, T.A. (2007). Organisational Behavior, 12th ed., Pearson Education, Inc., Upper Saddle River, NJ

Suderman, N. (1999). Business ethics. Emporia State University. Accessed August 03, 2011 from http://www.academic.emporia.edu

Vardi, Y and Weitz E 2004, Misbehaviour in organisations: theory, research and management, Lawrence Erlbaum Associates.

Werther, W B and Chandler, D 2006, Strategic Corporate Social Responsibility: Stakeholders in the Global Environment, Sage Publications Inc., London.

  

Responses to 101 Questions on Business Ethics

Business ethics is one of the most important concepts that an entrepreneur, manager, employees and other stakeholders should consider. It can be said that in order to have a morally and rightful business conducts, the management of the company and other people on it should be able to know the importance of business ethics. Accordingly, the behaviour in which business adhered to in the daily transaction with the world is business ethics. The ethical perspective of a specific organization can be different but these ethics are bounded by the ethical standards. Since there are many business who already have bad reputation because of their inability to follow ethical standards, various authors have written books that directly involved real people questioning about business ethics and how ethical dilemmas can be given solution.

There are various books that provide different issues and dilemmas relevant to business ethics and the authors have been able to provide personal perspectives about solving ethical issues. One of these is the book entitled Response to 101 Questions on Business Ethics by George Devine (1996). Accordingly, the book has been able to provide details and information about wide range topics of ethical issues and dilemmas inherent in the business arena for everyone from business employers to other stakeholders of the business like executives and sales people and management to the workforce, consumers and students.

The book has become very useful in the religious and theology cal studies because it provides and discusses information about practical business ethics from Christian perspective. The book also provide street-wise and candid look at business ethics in the 1990, discussing with integrity, honesty and business acumen real questions of professional ethics, ethics in the business environment and workplace and global and corporate ethics. In this book, the author has been able to answer questions from real students in his classes. His answers were base on his personal perspectives linked with theological and religious knowledge (Devine, 1996, 117).

The ethical questions came from his students and he answered each question hoping that the reader would be able to get involved in the writings in the book. The book is intended for teaching purposes in business environment, specifically for each stakeholder of the business. It gives critical information on how individuals should act and react in some business dilemmas in ethical manner.

Consequently, various global businesses including most of the organization of major brands can be seen not to think to greatly of good business ethics. Many of these companies have been fined millions for breaking ethical business standards. If an organization does not comply with business ethics and breaks certain laws, they typically end up being fined and gained bad reputation. In this regard, the book Responses to 101 Questions on Business Ethics by George Devine is a big help since it gives focus on real life scenario set up by students. It is helpful for the management, the staff and the entire company to know specific ways in dealing with ethical problems and dilemmas. The book has been especially made to enhance the knowledge of people associated with business operations to think moral and legal aspects in every undertaking.

This book is not only for business students but also for theological and religious students to be guided and live morally upright. The difference of this book from other business ethics books is that it is based on Christian perspectives and the bible is used as a reference for answering each question raised by the author’s students. This book is highly recommended for all individuals in the business, Christian and ordinary world.

Reference

Devine, G (1996). Responses to 101 Questions on Business Ethics. Mahwah,NJ: Paulist Press

Devine, George. Responses to 101 Questions on Business Ethics. Mahwah,NJ: Paulist Press, 1996. 117 pp

Business Ethics: KFC Ethical Issue

Introduction

According to Mohr (1996), corporate responsibility is supported by the concepts of multidimensional definitions and social marketing (Andreasen, 2001; Sacks, 2000). In the multidimensional definitions concept, the focus is on the major responsibilities expected from companies. These major responsibilities include economic, legal, ethical and philanthropic dimensions (Carroll, 1991; Gilbert, 1996). These responsibilities must be performed in order to benefit not only the company operators but also their employees, customers, the community and the general public in the global market (Hoffman et al, 1994). Kotler (1991) notes that the social marketing concept of corporate responsibility stresses those companies should operate in a way that maintains or enhances the well-being of its customers as well as its society (Farmer & Hogue, 1985; Sims, 1994).

One of the most important factors to be considered by an organisation is to ensure that they always follow ethical standards by providing quality products or services among customers. Ethics is something that is not only acquired and applied in the setting of the society (Ferrell & Fraedrich, 1997; Joseph & Esen, 2003). In every aspect of life, be it on business, community, religion, or politics, ethics is important (Lovell, 2002). In a way, a person’s ethical background is tested in times of pressure and uncertainty. One way of establishing good ethics is by caring for others (Stephen, Harrison & Philip, 1996, Ferrel et al, 2002). Furthermore, this concept is centred on fairness, honesty, and respect (Forsyth, 1992; Clarkson, et al 1998). In the workplace, where people normally interact with one another, ethics is also an important factor (Goodwin, 2000; Wright, Szeto & Lee, 2003), especially in building good working relations with others. And in the organisation, ethics means that the company should always ensure that the stakeholders are provided with quality products and services that adhere to ethical standards (Velasquez, 1998; Smith & Johnson, 1996)

There are many ethical issues that an organisation face and one of the organisations (Velasquez, 2005) which faces major issue is the Kentucky Fried Chicken. Primarily, the main objective of this paper is to provide a discussion about the issue faced by KFC and the ethical problems that the company encounters.

Overview of Kentucky Fried Chicken

Kentucky Fried Chicken is one of the well-known fast food restaurants in the world. The industry was founded by Colonel Sanders. The corporation is based in Louisville, Kentucky and now regarded as the most famous chicken restaurant chain. It can be noted that each day, nearly eight million customers avails the products and foods offered by this fast food chain. KFC has more than 11, 000 branches in more than 80 nations and territories all over the world. An in quite a few US cities, Kentucky Fried Chicken is teaming up with its sister companies which are the A&W and All-American Food.

KFC is among the most popular fast food brands in the world. Started out in the fifties, KFC now boasts of operating, franchising, and serving a worldwide chain of around 11,000 fast food restaurants that prepare, package and sell a menu of ready to eat foods. However, despite of the established brand of KFC Corporation and contrary to its previous achievements; it seems that there is a need for the management to redefine its image and follow some ethical standards (Solomon, 1997) in providing foods. The growing and bustling population of today is obviously different from the population of the previous decades in terms of health and nutritional attitudes and behaviors. People today are more concerned with their health and figures than ever before. Obviously, the reason for this increased awareness is because of the fact that information is everywhere and every reports and research about nutrition seem to link fast foods with the growing number of obesity. Furthermore, there is also a number of emerging diet programs that promote and encourage the public to be figure conscious.

This is a problem for Kentucky Fried Chicken since it has already gained the negative reputation of a food industry which continuously serves unhealthy and greasy food; while their competitors have already made some transformations on their menu reduce fats in their products. In this regard, KFC and other company needs to do something about and shift its positive image back and adhere to the business ethical standards to ensure that their corporate social responsibility are not being compromised (Smith & Thompson, 1991).

Overview of the Business Ethics Issue

Being one of the most popular fast food restaurants and with millions of people patronising the products and foods offered by the company, it is important the company adheres to ethical standards (Lozano, 2000; Velasquez, 2005) specifically in terms of providing healthy foods. However, it has been observed that Kentucky Fried Chicken is using oil which contains Tran’s fatty acids. This kind of oil is noted to increase cholesterol and even increased the risk of having heart disease. As authorities discovered this, the case was being carried over by the consumer group Center for Science in the Public Interest and told the company to use healthier cooking products than the one they are using.

Tran’s fatty acids have been the topic of much debate among nutrition scientists. They are by-products of hydrogenation of liquid vegetable oils in the manufacture of margarines and hydrogenated fats to formulate commercially prepared baked goods and fried foods (Lichtenstein, 1995) like what have been accused to KFC.

Gram for gram, they are believed to be twice as damaging as saturated fat. The Nutrition Action Healthletter, published by the Center for Science in the Public Interest (CSPI), reported in 1997 that in clinical studies Tran’s fat raised people’s blood cholesterol about as much as saturated fat did. Because trans-fatty acids are not listed on food labels, they are invisible to consumers. The CSPI found that the trans-fat content in most chains’ French fries equalled or even exceeded the amount of saturated fat. That means a big order of fries has as much bad fat as a signature burger. With the negative effect of this to the people, KFC has been faced with problems in terms of following business ethics and finding ways to find solutions to these kinds of issue.

The Role of Business Ethics in the Issue

There is no doubt that business ethics plays a more and more important role in modern economy (Schwartz & Gibb, 1999). Business ethics is primarily an applied ethics. It takes ethical concepts and applies them in specific business situations(Cotton, 1998; Davis, 1990). Like political economy, but unlike the philosophy of business, business ethics is a normative discipline (Jones & Pollitt, 1998). It makes specific judgments about right and wrong. It makes claims about what should be done and what aught not to be done (Cowton & Crisp, 1998). It is less concerned with explaining or describing ethical events or analyzing ethical concepts to achieve a deeper understanding of their meaning and justification (Brown, 1990; Webster, 1995). Consequently, there is no clear moral compass to guide leaders through complex dilemmas about what is right or wrong (Shaw & Barry, 1995; Frederick, 1992). Attention to ethics in the workplace sensitizes leaders and staff to how they should act. Perhaps most important, attention to ethics in the workplaces helps ensure that when leaders and managers are struggling in times of crises and confusion, they retain a strong moral compass. However, attention to business ethics provides numerous other benefits as well (Walters et al., 1997, p. 8).

The right thing to do isn't always clear in business (Kirrane, 1990). Thus the company needs some common principles to guide the behaviours. It is much easier for a company with good moral conducts to build its reputation and win respect from all aspects of a society.

Lewis’ (1985) research provides valuable information concerning how contemporary authors and business people define 'business ethics'. A synthesis of definitions reveals a definition emphasizing a majority of opinions about what is ethical for managers. Thus, business ethics is more than just virtue, integrity, or character. It involves the application of one's understanding of what is morally right and truthful at a time of ethical dilemma (Lewis 1985). Many studies have been done on business ethic. DeGeorge (1982, pp. 12-15) divides ethical study into three related phases: normative ethics, descriptive ethics, and meta-ethics.

When it comes to a specific industry, say here Fast food industry the author think that the business ethic is the moral rule that should be obeyed by all the managerial persons and ordinary staffs in dealing with the internal and external affairs with accordance to its operational principle (Boatright, 2000). For a tertiary industry, the building of business ethics is rather important because the leading position and importance of the role of person is rather obvious in the service industry (De George, 1999). For some business ethic issues such as lacking of a sense of responsibility, fanatical money worship, the dilution of profession values and rules (McNair, 1998), delinquency, abuse of power and employing all the methods including illegal ones to earn profits, the improper ways to deal with them or the ignorance of them will definitely lead to business failure and even crimes. In the contrary, the building of a good responsibility and legal system of a hotel, which is representative of business ethic spirits, will effectively solve these problems (Donaldson et al, 2002).

Benefits that ethical consideration can bring

As Cheung (1996, cited in Cheung, 1998) has said, ethics education should be emphasized in order to help managerial persons to think not only beyond self interest in decision-making, but also to consider the interests of society. It has been said that although many of leaders of today have outstanding capabilities and aptitudes (Gamage & Pang, 2003), only those company leader comprising strong values in ethical management are said to ultimately succeed (Butcher, 1997).

It is definitely necessary for a fast food chain like KFC to take ethical considerations into account when they are making decisions .So ethical considerations should doubtlessly be an influence on the decision-making processes. This will be well demonstrated and proved by the major functions of ethical systems of a hotel. In other words, if a hotel wants to exert the following functions, it should give some weight to ethical considerations.

Generally, the successful realization of an organizational objective mainly depends on the degree to which the staffs recognize and accept this goal. The ethics of a hotel represent the fundamental values of all staffs, which are shared by each other. So the building of the fast food chain ethics and emphasise on it will bring in good guidance which is an important precondition to improve the management of a fast food industry. Because of the unique nature of the industry, there are more opportunities than in any other industry when ethics becomes an issue at stake (Stevens and Fleckenstein, 1999).

A fast food chain industry with good business ethics can usually arouse a sense of responsibility and belong among its staffs and even the general publics that may be very conducive to the coordination and realization of company goals. There are two ways to motivate staffs---material motivation and spiritual motivations. So the pure material motivations will ultimately increase the expenditure. If a company wants to motivate staff more, it has to pay more. What is worse, if you lower down the incentives, it will result in unsatisfaction and resentment. Take ethical issues in the decision in all walks of a company will be helpful to the working atmosphere. The building and accumulation of a hotel ethics will be embodied in the details and in other words, every decision. Some research results show that negative beliefs lead to negative attitudes and negative behaviours (Challenger, Margaret Kathleen, 1995).

Ethical Stance

The ethical stance that can be adopted by the company is perhaps the one pertaining to the assurance of providing healthy products by using alternative oils which do not contains Tran’s fatty acids. The company’s ethical stance should not be based on short term goals. Kentucky Fried Chicken may have said that they are not using these kinds of oils to adhere to ethical standards of protecting the health of their customers but these efforts do not directly address the problem. The company is still encountering negative issues brought about by its negligent behaviour.

The traditional ethical stance of the company is to prevent actual problems on health and nutrition. However, there is an obvious lack for long term plans that will also maintain these developments even in years to come. Kentucky Fried Chicken should then realize that the company does not only have a responsibility to their current customers but to future generations as well. The scope of responsibility as cited in this discussion should include the provision of respect for others, honest and pure intentions as well as protection from harm (Hill, 2003). The management of the company should be responsible (Michalos, 1995) in maintaining that healthy and nutritional foods which future generations will need as well so as to survive. According to Martin Golding, the moral community also includes future generations, implying that though this generation is still nonexistent, people today should act for their benefit (Partridge, 1981).

According to Stapledon (1996), corporate governance under a good ethical management can be defined as a system that is used in order to direct and control companies. As a matter of fact, this idea applies to all business sectors all throughout the world such as the banking institutions, financial corporations and other types of businesses such as the retailing industry. In particular, corporate governance refers to the examination of the control of a company as utilized by its directors. In accordance to theory, the directors of public companies are held responsible for their action by their shareholders (Davies, 1999). On the other hand, the authority of the shareholders to influence the behavior of the company directors is limited in practice and is rarely exercised. This then provides directors of considerable power to take action as they see fit. However, this is not always the case as it appears to be relatively different form that of the government in which the action of the officials is slightly restrained by certain actions of the people it governs.

Good ethical management through a societal marketing approach, as a term, has come to imply good, in the non-moral as well as the moral sense. In its moral sense good ethical management has come to be seen as promoting an ethical climate that is both morally appropriate in itself, and consequentially appropriate in that ethical behavior in business is reflected in desirable commercial outcomes (Francis, 2000). Thus, the links here are with due diligence, directors' duties, and the general tightening of corporate responsibility.

The company’s management style should set a proper example of good intent, and provide for those lower in corporate hierarchies the clear message that it is “do as I do” as well as “do as I say” (Francis, 2000). Middle and lower management find it hard to be ethical when it seems that the top of the corporate hierarchy have no commitment. The message of sincerity will always filter down, and no amount of deception will foster the view that a board is ethical when it plainly is not.

Additionally, the commitment to ethical corporate governance by a board will enhance the prospects of an ethical infrastructure within the organization. That ethical infrastructure is a manifestation of the commitment, a means of preventing and resolving ethical problems, and an impressive demonstration of sincerity.

Reflective Essay

One of the responsibilities of an organisation is to make sure that all their actions and business operations adhere to the ethical standards provided by the law. Other than strategies for marketing and management, businesses have considered other elements that play significant roles towards success. One of these important elements is ethics. As business requires social interaction and dealings, the strong recognition of what is morally right or wrong is then essential. In this reflective discussion, various ethical theories will be described. The main purpose of this paper is to identify the role of each theory to business and how these theories can be helpful to modern operations. In my own perspective, I can say that being a company that provide foods, KFC has ethical responsibility to ensure that what they provide to the market are healthy foods.

With the issue faced by KFC, I can say that the company should be able to use an ethical management strategy that will uplift the image of the company. In this regard, the company may use societal marketing strategy. Societal marketing is that branch of marketing concerned both with the uses of marketing knowledge, concepts, and techniques to enhance social ends as well as with the social consequences of marketing policies, decisions, and actions. The purview of social marketing is, therefore, broader than that of managerial marketing. It refers to the study of markets and marketing activities within a total social system. Societal marketing emerged because of the convolution of several factors and forces in the marketing environment. These include affluence, technology, communications media, better informed citizens, increased educational opportunities, and social value changes. The latter can be considered as one of the most powerful single influences.

The concept of societal marketing adheres to the business ethics which states that the task of an organisation is to identify the needs, wants and interest of its audience and to provide the desired satisfactions more effectively than its rivals in such a manner that preserves or improves the well-being of both the consumers and the society especially in terms of health nutrition. In addition, such marketing approach calls upon marketers to give emphasis to three important aspects of their marketing policies. These include company profits, consumer wants and satisfaction and public interest.

I can say that the inclusion of the social responsibility concept to the business sector is not only necessary to broaden the companies’ involvement to social matters. The application of social responsibility to organizations is in fact a main contributory factor to their profitability and to ensure that they always follow ethical matters while doing their business (Suderman, 1999). This is important because the profitability of a business is also related on their reputation and image on the market.

A study has been conducted with regards to the significance of social responsibility to profitability (Mohr & Webb, 2001). Although, further studies are still necessary in order to analyze the correlation of these factors, the findings of Mohr and Webb showed that social responsibility plays a significant role in consumer appeal. The perceptions of consumers however, tends to vary with regards to this aspect. Nonetheless, this stresses the importance of social responsibility not only on benefiting the stakeholders but also in achieving the goals of the companies towards growth and profitability.

At present, I can say that the management of KFC have already realized the growing importance of social responsibility and that integrating this concept cannot be sufficiently supported by the optimization of shareholder value. Furthermore, I can also say that having a business organisation that considers ethical management are business which can easily gain respect and good reputation from the customers. Contrary to the belief that social responsibility undermines businesses’ profitability goal, this actually help in generating profit through customer loyalty and good company image. For Kentucky Fried Chicken, the company must be able to ensure that the products that they offer are healthy and nutritional, so as to ensure also that their gain customer trust, loyalty and respect.

This report has been able to determine the importance of adhering to business ethics and the importance of having a business that adheres to ethical standards. I can say that a company must be able to follow ethical standards to ensure that what they do will always have a positive impact to the society, environment and other external aspects of business. Because of this report, I have been able to realize the significance of business ethics in having a profitable and socially responsible company. The evidences that have been discussed in this report which proved the importance of business ethics will be useful for my future endeavour as an entrepreneur. I can say that this report has made me determined the things that I must do when I have my own business in the future, specifically in terms of decision making process.

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