Ethics can be defined as: a system of moral principles or rules of behavior. Now, when we apply this definition directly to a business, ethics can simply mean the moral principles which a firm or more specifically, the person in charge (such as the CEO) follows when running their business. However, this definition as a whole is flawed since there is no single list of moral principles which firms must obey or follow. Moreover, what does it mean to moral? Is there one set of guidelines which informs us or a firm to be moral?

In order to further explore this issue, we must look at a real world example. Recently, CVS, one of the largest pharmaceutical companies in the US decided to quit selling cigarette products. Having said so, we can now examine this move from CVS using two different approaches. One would be as it is stated in the book, Corporate Ethics and Corporate Governance: “…a corporate executive is an employee of the owners of the business. He has directly responsibility to his employers. That responsibility is to conduct the business in accordance with their desires which generally will be to make as much as money possible while conforming to the basic rules of the society.” As it is stated in the article, the company is estimated to lose an estimated $2 billion in sales as a result of this decision, however, this loss is a mere dent compared to its overall sales of $123 billion in 2012.

According to the quote which is mentioned above, this decision may be seen to be immoral or unethical as CVS is unnecessarily reducing profits (although it is a relatively small reduction) for its shareholders since selling cigarettes is a legal act which conforms to the basic rules of society. However, this is a rather linear way of viewing this decision. A counter way in which we could view this is that as a result of this decision, CVS may in fact yield more profits over the long run for its shareholders due to the building of a strong brand. Through this decision, CVS is consciously choosing to be a brand which cares for its customers’ health. As Dr. Brawley so cleverly puts in the article, “If you’re in the business of promoting health and providing health care, it’s very hypocritical to be selling tobacco products.”

SOURCE

Article –  http://www.nytimes.com/2014/02/06/business/cvs-plans-to-end-sales-of-tobacco-products-by-october.html

WORKS CITED

Zimmerli, W., Richter, K. and Holzinger, M. (2007). Corporate ethics and corporate governance. 1st ed. Berlin: Springer.