Ethics is Important for Company to Run Business

7/29/2019 Ethics is Important for Company to Run Business

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MM 5001

Business Law and Business Ethics

INDIVIDUAL MIDTERM EXAM

Ethic Is Important for Every Company to Run The Business

With The Focus in Hotel Industry

29111311 Haidir Afesina

MBA Executive 46

MASTER OF BUSINESS ADMINISTRATION

SCHOOL OF BUSINESS AND MANAGEMENT

INSTITUT TEKNOLOGI BANDUNG

2012


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Executive Summary

The aim of this essay is to emphasize ethics as critical aspects of running business. It focuses

on business ethics and the social responsibility of business enterprises or company. The essay

gives an example of ethics and social responsibilities in Hospitality Industry i.e. Hotel. It

examines the role of ethics in business world (hotel industry) and ethical dilemmas

encountered by company in hotel industry especially in Indonesia. Books and Internet along

with the Author experiences are being used as references. In the end, a good business ethics

practices increases the reputation and market competitiveness of the company. It creates a

company grow with character. Therefore it has an important role to the sustainability to the

company performance.

1. Introduction

1.1 Objectives

The objectives of this essay are;

1. To define the relationship of ethics and business2. To analyze the importance of ethics for company that impact to business performance

1.2 Challenges

The challenges for the company to put ethics in practice in globalization era are;

1. The expectation and perception of the stakeholders2. The influences of the company as a moral environment3. The difficulties in arriving at ethical decision in business that is highly competitive

2. Background

2.1 Ethics and Business

Public interests in ethics as critical aspects of business behavior come and go. Some argued

that ethics is increasingly viewed to be important component of business education whilst

others view as theory. Laura Nash stated in Weiss (2006) described the principle of ethics is

the study of right or wrong in accordance to the norms. In other words is the general inquiry

into what is good. It is linked to morality. On the other hand, business defines as a process

that goods and services are exchanged to make profit. It is an economy system that growth

and profit are the primary goals. According to Weiss (2006) business ethics is a basic

framework, often guided by law that businesses may choose to follow in order to gain public

acceptance. Thus business is part of the social system that cannot isolate the economic


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elements of major decisions from their social consequences. Therefore the relation of ethics

in business is as guidelines to address the moral implications of business decisions. In other

words, it is the moral and social responsibility of the company to the community.

2.2 Hotel Industry

Hospitality industry (Hotel and Tourism) is one of the world`s developed industry. It has a

great tendency to be the world`s greatest industry that create a social phenomenon, especially

in Indonesia. It is highly competitive sector as the numbers of hotels are increasing.

Hospitality itself implies warm welcome, friendliness and comfort. The aim of hospitality

industry is to please people with service and utmost care whilst create business at the same

time. Means it will bring group of people to come and buy the serviced experience and also

invite people to work.

This is what connects the industry and ethics. Thus, the managers at hotel are experiences the

stress daily. The decision of any activities not only has to be profitable and efficient but also

with respect to ethical principles. Sometimes good managers make bad ethical choices such

as getting alcohol licenses and events, hiring people, shared corporate information and hotel

wastes. In addition, there are some perceptions from society that glamorous life of hotel

business is unethical i.e. leisure hotel facilities (spa and bar). Therefore, business is part of

the social system that cannot isolate the economic elements of major decisions from their

social consequences. Furthermore, there are some issues arise within the people inside the

company, such as;

1. Why use ethical reasoning in business?2. Can ethics and profit be compatible?

3. Analysis

The perception of people to the company is important to run and expand the business. In

order to categorize a company that is ethical on running business is when all the decisions

made are accountable, not only towards its owners and employees but also towards the

community within which it operates, and towards all people and the environment. In other

words, the action for moral outcomes is important. Therefore the critical aspects are the

executive (managers) as moral individual and the corporation as moral environment. The

public judgments are coming to the company no matter if it is individual that act unethical.

The policy formulation and implementation can affect the moral environment of company


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that influences the moral character of employee. The Author is using the examples from his

past experiences to describe the awareness of company to the importance of the ethics. It is

based on the four fundamental questions, there are;

1. Is the action consistent with the actors basic duties?2. Does it respect the rights and other legitimate claims of the affected parties?3. Does it reflect best practice?4. Is it compatible with the actors own deeply held commitments?

The first two questions bring out basic requirement that would be expected in any situation

and the last two questions that are discretionary but important.

3.1 Ethics at Hotel Mulia Senayan

As one of the prestigious independent five stars Hotel in Indonesia, there are some ethical

issues that happened repetitively. Ethics has to be considered to both of internal and external.

From the internal sides, such as;

1. HR policies including recruitment, equal opportunities, pay and working conditionsThe benefit packages are given according to their role, such as insurance and hotel`s

service charge (monthly bonus). There is also a benefit packages for those part timers.

The daily payment for them is higher than others five stars hotels in Jakarta. There is

also an opportunity for disable person in some position. The company is also given

5kg`s rice to full timers who already married every week. The quality of the rice the

same quality that is being use for hotel`s guests. Giving training and certification

course for employee and have a religious event twice a month.

2. Health and safety to staffThe company provides food for employees twice a day during their working day.

Employees can also request for their special meal based on their dietary requirements.

Rooms are provided for those who work at night shift. Standard of procedures is also

tightly monitored in order to stress the safety, especially in kitchen area. It will not be

allowed to any employees who come to work without safety attribute such as safety

shoes.

From the external sides, such as;

1. Government policies, regulation and legislationCompany is using original software in each computer at every department. The

license to play music in the restaurant or lobby, also tight control for foreigners data


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and information that has to be reported to Police in every single visit. Then getting

alcohol licenses selling that has to be renewed annually.

2. Relation with local community and impact to environmentHiring local people surrounding in some percentages at some position such as security

and housekeeping. Donate and monthly charity events to support the community

nearby. Also having quarterly community services from every department that is

being rotated.

3. Purchasing policies and relations with supplierDealing with reliable food supplier that has been carefully analyzes and selected.

3.2. Ethical Standard

HMS viewed ethics as managing integrity. There are the standard that being use as guidelines

to all employees. Thus every business decision and activities will show a strong character of

HMS`s ethical identity, there are;

1. Trustworthiness2. Respect3. Responsibilities4. Fairness5. Caring6. Citizenship

Those six ethical identities are becoming the core values and belief to do business.

Increasingly the business environment is tending toward a global economy. With this trend

comes excitement, opportunity, and unfortunately potential for problems associated with

differing attitudes and practices commonly encountered when interacting with cultures

different from our own. As morality, in business or elsewhere, always involves a personal

choice. Those who practice gamesmanship do whatever they can getaway with to win whilst

those who practice sportsmanship pursue a victory with passion and honor. Causing no harm

whenever possible but when things go wrong try to minimize the harm to avoid altogether.

Thus it is a long-range decision. Therefore the HMS tries to build conducive moral

environment.

3.2 Good ethics is good business

At HMS, there are some critical points to be found by applying good ethics in business;


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1. HMS is able to attract people to as a place to work because of the perceptions asethically and social responsible companies whilst those who have a reputation of

being unethical have difficult tome recruiting

2. The way HMS set the rules, shared values, develop moral and respect the norms to theemployees influence the individual moral of employees

3. Business ethics largely affects the development of society surround the area i.e. PatalSenayan area

4. Embracing positive ethical values makes an important contribution to ongoingsupplier/buyer relationships i.e. able to attract both of prestigious international and

national supplier with a long term contract

However, there are also some views that being found from the archive of HMS employees

who had disciplinary action of being unethical, such as;

1. A view that the activity is safe because it will never be found out2. A view that being unethical in business is sometimes needed as a game strategy3. A view that being ethic is irrational whilst business is rational aspects4. The pressure from the management to the executives to create profit at any cost

Ethical things to do may not always be in the best interest of the company, as profit is the

most important interest. However, It is the job of the executives at the company to make

ethical business decision based on the social perception. The ability to recognize ethical

issues and to think through the consequences of alternative solutions is becoming an

important skill. Having a status of ethical company will help generate business. However, the

most important reason being ethics is not because good ethics is good business but we are

morally required to adopt the moral point of view in all our dealings with other, and business

is no exception.

3.3 Ethics as a character

We are living in the era of transparency. The era that there is no place to keep our secret

today because of the impact of technology. Word of mouth goes world of mouth. Thus, the

community perception is very powerful to the company performance. The meaning of

transparency itself is that people like to make business with us and accept by the surrounding

as they know, they like and they trust us. To restore trust in business, ethical leadership is

more necessary than ever before. It is becoming the character. Ethics is a component of


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quality to be attained only within the long-term perspective. The short-term goal of profit at

any cost carries the risk of low quality, which can result in company failure and

unemployment. Therefore, a company has responsibility not only towards its owners and

employees but also towards the community within which it operates, and towards all people

and the environment in the widest sense of the word. However, the company activity to

develop the community has to get the support from the community itself.

4. Conclusion

It is the job of the executives at the company to make ethical business decision based on the

social perception. Business has always had the ability to bring out the worst in people. To

operate effectively in this dynamic environment, business leaders today need to think and

react with more over awareness of the moral issues surrounding everyday business decisions.

Ethics should be a component part of all activities in all hotel departments, with the ethical

elements defined according to the specific work and responsibilities of each department. In

addition, ethical issues must be addressed by individuals, groups, corporations, and even

nations in very different ways, and the consequences differ with each person or group

involved. Therefore the HMS system and policy stated those who behave unethically would

be discharged straightforward with no compensation. However, the investigation will always

take place.

References

Andrews, Kenneth R (1989) Ethics in Practice: Managing the Moral Corporation Boston:

Harvard Business School Press

Weiss, Joseph W, (2006) Business Ethics: A Stakeholder and Issues Management Approach,

Thompson Southwestern

Wood, Roy C, (2003) Strategic Questions in Food and Beverage Management, Oxford:

Butterworth Heinemann

Documents

Ethics is Important for Company to Run Business