Business Ethics


BusinessEthics in the Tobacco Industry

Companiesin the Tobacco industry, mostly, focus on their traditional roles ofcreating, producing, packaging, and selling their products for profitwith little regard to consumer`s health. Most of the regulationsinstituted by authorities are meant at protecting the consumers fromthe greediness of some organizations or companies. Consumers cannotbe left alone in deciding on the safety of the products they takebecause they do not have the necessary knowledge. Companies have anethical obligation of protecting people, but it is highly unlikelythey will do that since they risk losing revenue.

Argumentagainst the Industry

Itwould be erroneous to make an assumption that all manufacturers areequal, and most of the regulated ones are targeted unfairly. Thetobacco industry is mostly targeted by regulations as the authoritiesbelieve that the industry cannot regulate itself. For instance, thegovernment needs to control the advertising by tobacco companies as ameasure of preventing more people from being dissuaded from smoking.Smoking is harmful to any human being but in most cases the tobaccocompanies make it look appealing to the youth through advertising.

Roleof Capitalism in Corporate Decision-Making

Ina corporation, capitalism means that there is less governmentinterference and that the stakeholders control decisions. Capitalismplays a huge role in corporate decision making in that it enables thecompany to focus on sales and profits to accumulate wealth. Manycorporations take advantage of the fewer controls by the governmentto make more profit at the expense of the consumer. When thecompanies make a profit, it means that the consumers will suffer inturn due to the harmful tobacco products [ CITATION Lau08 l 1033 ].

Thebasic way that the companies can use to increase their sales andprofit is by advertisements and promotions whereby they only mentionthe benefits of smoking without letting the consumers know of therepercussions of smoking. The best way for corporations in thetobacco industry to make good decisions is by taking intoconsideration the health of the consumers first and not profits.

CateringFor both Company and Consumer Interests

Cateringfor both the interests of corporations and consumers is impracticalin the tobacco industry. It is a well-established scientific factthat tobacco smoking is harmful to the health of human beings. Sincethe main aim of the companies is profit maximization, it is veryunlikely that they will alert their clients to the dangers of smokingtobacco products. Tobacco companies understand that the goods areaddictive, so all they have to do is to entice consumers withadvertisements, and once they are hooked, they will remain loyal [ CITATION Rob08 l 1033 ].

Tobaccosmoking is harmful and worse still it affects even innocent peoplewho happen to be near a smoker. Tobacco companies cannot alert theirclientele on the dangers of smoking due to the weak sales that willfollow up. It is highly unlikely that a tobacco consumer willpurchase a product after its manufacture points out that it isharmful.

Thegrowth of the tobacco companies depends mostly on the ignorance andrecklessness of the consumers regarding the dangers of smoking. Insome instances, tobacco companies sponsored research and studies thatwere meant to show that smoking is not harmful as many people think.The government has since prevailed on the tobacco companies to reducetheir advertising and also not sell the products to people less thaneighteen years of age.

Businessethic demands that companies must be responsible and ensure that thegoods they sell to the public or they produce valid informationregarding the products they are selling. The tobacco industry doesnot follow such a notion since telling their clients about thedangers of their products would mean a reduction of the market [ CITATION Lau08 l 1033 ].


Hartman, L. P. (2008). Business Ethics : Decision-Making for Personal Integrity and Social Responsibility. Boston : McGraw-Hill.

Kolb, R. W. (2008).Encyclopedia Oof and Society . California : Sage .

Business Ethics



EnronCompany was a reputable and successful firm in the energy sector butcollapsed due to unethical corporate practices. The scandal at thefirm was a deliberate corporate fraud by the executives andemployees. Although the firm had experienced considerable growthpreviously, it filed for bankruptcy in 2001. The firm finallycollapsed in 2004 (Madsen&amp Vance, 2009).Adelphia Communications (GLBC), a former telecommunications company,is another American firm that collapsed in 2006 due poor accountingpractices. Nortel Corporation was an American telecommunication firmthat collapsed in 2009 after a series of accounting irregularitiesand mismanagement. The firm’s executives engaged in multipleirregularities and unethical practices such as book-keeping (Fogarty,Magnan, &amp Markarian, n.d.). Fromthe three cases, the main unethical practices were bookkeepingirregularities and non-compliance to accounting guidelines.Executives and employees manipulated financial reports as well ascoerced with auditors to give a false position about the firm’sfinancial standing.

Thedownfall of the three companies led to job loses for thousands ofemployees. Such employees become a burden to the nation and employeeswho were left jobless. The consequences point to deliberate effortsby unethical managers and employees about the interests ofstakeholders. Further, stockholders lost their investment after thecollapse of their respective firms. Some faced legal suits to help inrecovering money, and charging perpetrators (Kurtz &amp Boone,2009).

Theadoption of ethical practices, good accounting procedures, andeffective governance policies can help in preventing businesses fromcollapse because of unethical practices. Securities and ExchangeCommission considers accounting and auditing irregularities as themain ways through companies cheat. WhistleblowerProtection Act of 1989was created by the US federal government to help in the protection ofindividuals who report misconduct and unethical practices withintheir organizations (Kurtz &amp Boone, 2009).


Fogarty,T., Magnan, M. L., &amp Markarian, G. (n.d.). CaseStudy: Nortel: The Rise and Fall of a Telecommunications Company.

Kurtz,D. L., &amp Boone, L. E. (2009). Contemporarybusiness.Mason, OH: South-Western Cengage Learning.

Madsen,S., &amp Vance, C. (2009). Unlearned lessons from the past: Aninsider`s view of Enron`s downfall. CorporateGovernance, 9(2),216-227.