Business Ethics: A False Hope

Business Ethics: Midterm paper

The business world has always relied heavily on contractual agreements while conducting business. These contracts while written in ink, are set in stone. Once your business partner signs his/her name on the dotted line the pact has been sealed and nothing else needs to be said. But what happens when you take away the physical contractual element and everything is agreed upon through one's word?

The world of business ethics is an old discipline in most parts of the world, and in most cases, is applied to the everyday business world. But in the case of China, the country of exaggerated numbers and inflated profit margins, business ethics has yet to be fully assimilated into the Chinese business culture.

Business ethics is a multi-faceted approach to honesty, integrity, and straight-forwardness in the corporate world. This paper however, is concerned with two main business ethics' topics brought up by Dr. Rothlin in his book, Becoming a Top Notch Player: 18 Rules of International Business Ethics. We will be discussing rules 14 &15 in the following. Rule 14 deals with securing your public reputation by having a commitment to quality and excellence. Rule 15 deals mainly with corruption and it's negative impacts on day-to-day business dealings. Although rules 14 &15 are both in the realm of business ethics, they are very different by nature and therefore we decided to give them each their own separate section. The first section we will go over is rule 14, following that is rule 15.

Rule 14 states, "Your public relations strategy will only secure your reputation if it witnesses your drive for quality and excellence". At first glance, this seems like a rather straightforward, obvious principle to abide by in your business dealings. But upon further inspection, we see that there are multiple layers to it.

A case study here in China shows us the importance of rule 14. During the summer of 1998, terrible rainstorms hit the Yangtze river causing it to flood much of the surrounding area. This flooding caused an estimated blablabla in damage and drove hundreds of thousands of people from their homes. In order to help the people who were affected by the flood, CCTV organized a charity drive in which people could pledge money devoted to aiding all those affected. During the broadcast, many companies and corporations pledged RMB to the unfortunate families. The Red Cross asked that everyone who promised to donate money deliver it within a year. Then when a year was up, a huge portion of the promised money was left undelivered. One day, the Greeson Medicine Corporation, and American based company, received news that three of its Chinese business partners were guilty of not delivering on their promise of pledging the money to the flood victims. The intelligence institute which informed them of this recommended that GMC cut all business ties with the three companies. This put GMC in a tough spot. They had two options. One was to ignore that the three companies had done anything wrong and continue to do business with them and share in their profits. However, if it were brought to the public's attention that GMC knew of this dishonest behavior and looked past it with hollow eyes, the public would have a negative image of GMC. The other option was to completely shut down business relations with the companies, The plus side to this was that they wouldn't be affiliated in any way with these three dishonest firms. However, in doing so GMC would be deprived of all the revenues that business with these companies would bring. In a pure business sense, this is strictly a financial decision. But on a moral and values level, the question becomes more complicated.

When the time came to make a decision, GMC chose to err on the side of morality and cut off business relations with the three Chinese companies. Afterwards they explained, "If they break their promises in such a circumstance, how can we trust them?" Rather than be associated with a company with questionable reputation, GMC showed the public and the rest of the business firms in China that sometimes you must put values in front of the dollar sign. GMC's decision shows us three things. First, prestige is important. The more distinguished your reputation, the better. Second, a company's viability depends heavily on quality, responsibility, and trust. Lastly, it is important to know who your business partners are. Before you become thoroughly engaged in business dealings with someone, you should look into not only how they make their business decisions, but also look at their reliability in other fields.

"Companies must recognize commercial morality by considering the moral, economic, and legal aspects of every decision they make" (Rothlin 204). Most financial decisions are straightforward, however sometimes what looks to be a quick easy decision may lose you more money than you make.

Commercial morality is made up of six parts, duty, objective, skill, conscience, reputation, and style. It is slowly cultivated through innumerable transactions and partnerships through the years. . Commercial morality is not something you can achieve overnight. The example above shows how fragile it really is. The three companies worked very hard to build up their reputation to where they had it, but then when they failed to donate the money promised their reputation with quickly destroyed. They lost a profitably foreign business partner in GMC, and most likely will lose even more in sales due to their now questionable reputation. Maybe they saved 100,000 RMB by not pledging the money, but they suffered greatly for it in the end. Perhaps Rothlin puts it best when he says, "Was this decision economical? No. To some degree, good morality economics means good marketing economics."

Chinese companies must pay much closer attention to building and maintaining