Seminar in Business Ethics and

Social Responsibility

SMT 940

Abeer Youssef
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 Overview- Lecture 3
• Ethical decisions

• Ethical decision making

• Case study: L’Oreal

• Ethical decision-making approaches

➢ Five-step model of ethical decision making
➢ 8 Ethical tests
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 Ethical decisions

How does one make an ethical decision?

What is it that needs to be taken into account to behave
ethically?
What outcome are we supposed to aim for?

Think about what it must have felt like for the captain of
the Titanic, back in 1912, and try to put yourself in his
shoes in this video.

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- There are 1300 passengers, and 900 crew members.
- They included: Women, men, and children; young and
old; rich and poor; healthy and sick people, and your
family has also travelled with you.

SO, WHO GETS A PLACE IN THE BOAT??

- As the captain, you have to decide.

- So, who would you choose?
- And why?
- Discuss in groups

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 Find out about how your choices as a
captain of the Titanic can be explained
in terms of ethical theory in this video

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 Ethical decision making
- Everyday people in organisations make decisions:
▪ Some are routine, others more complex,
▪ Some are short-term, others long-term.
▪ They will involve factors that include financial and
legal implications and, increasingly, those
implications are of a social and ethical nature.

- The more complex decisions tend to be the longer-term

ones. This doesn’t, of course, intend to minimise the
impact of the more routine decisions.

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- Decisions will be made in businesses operate in a
dynamic environment and the practicalities of trying to
make a considered decision in such an environment are
often problematic.

- We need to weigh up the considerations that may impact

our choice of a course of action, which can also be that of
not acting at all.

- Decisions do not always lead to action – sometimes we

can decide to do nothing.

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- But doing nothing also has ethical implications; not
standing up for our principles or our colleagues in the first
instance makes it even harder to do so the next time our
principles are affected, or our colleagues need help.

- Business leaders are responsible to make strategic

decisions. They should not be concerned with the day-to-
day operational decisions but instead focus on the long-
term future of the business.

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- However, this is perhaps a little unrealistic as business leaders
at all levels have to act as trouble-shooters with their own
staff, satisfy the short-term demands of shareholders, or even
meet the urgent demands of politicians, regulators or the press.

- It is sometimes difficult for leaders to extract themselves from

the turmoil of the present to reflect upon the longer term, even
though how leaders deal with the present may determine the
future.

- This is particularly the case in ethics, where their day-to-day

decisions might impact future generations and the
sustainability of the planet.

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 Case study

Clearly, businesses operate within legal and

regulatory constraints. But whilst this is a necessary
condition for business, is it a sufficient condition?

Just because a decision conforms to the law does

not make it an ethical decision!

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 L’Oreal
• L'Oréal S.A. is a French personal care company headquartered
in Clichy, Hauts-de-Seine, with a registered office in Paris.

• It is the world's largest cosmetics company and has developed

activities in the field, concentrating on hair colour, skin care,
sun protection, make-up, perfume, and hair care.

• L'Oreal market value/capitalisation is estimated by 237 billion

EUR. This makes L'Oréal the world's 36th most valuable
company by market capital.

• L'Oreal has about 86K employees across 150 countries on five

continents.
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 L’Oreal
Animal Testing
What is animal testing, watch the video
https://www.youtube.com/watch?v=rYATRV6W4iA

L’Oreal cruelty free

According to L’Oréal, “We care for animal welfare, and we do
not test on animals. We are for beauty with no animal testing.
Since 1989, we have not tested the safety of our products on
animals, 14 years before regulations required us to do so".

Watch the video

https://www.youtube.com/watch?v=pWmfXA0X6ZI
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Let's address the elephant in the room.

In China, regulators make it mandatory for companies to test

their products on animals before they can be sold. This
creates a big dilemma for these cosmetics makers:

- Do they risk backlash from customers who demand

animal-cruelty free,

- Or do they jump in to grab a piece of the Chinese market?

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- Because L’Oreal Paris has decided to sell in mainland China
stores, they must consent and pay to have their products tested
on animals. That’s why most cosmetics brands selling in
mainland China cannot be considered cruelty-free in 2022.

- Although L’Oreal Paris may not be conducting these animal

tests themselves, they knowingly allow Chinese authorities to
test their products on animals to sell in China.

- Also, L’Oreal offers some “vegan” options that are free of

animal-derived ingredients, but for animal rights groups and
vegans because L’Oreal engages in animal testing, they would
not classify anything sold or produced by L’Oreal to be vegan.

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- A number of cosmetics brands have pulled out of the
Chinese market due to its animal testing laws.
Dermalogica, Urban Decay, Nature’s Gate, the Body
Shop and Lush Cosmetics all currently refuse to sell their
products in the region.

- This is called a competitive advantage for their

competitors (it's a unique benefit customers get when they
do business with their competitors).

- Now you can see, just because a decision conforms to the

law does not make it an ethical decision. “I was just
following orders” is not a defence against unethical
behaviour. We have to take responsibility for our actions.
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- Ultimately, decision making involves individuals
exercising their moral judgement and being able to justify
their decisions.

- There is the argument that if a business is making money,

then all will benefit anyway –employees, suppliers, the
local economy and the wider society. But what if that
profit is made on the backs of low-paid workers, or not
paying taxes, or by driving down supplier payments?
Where leaders stand on these kinds of issues and the
trade-offs, they make in their decisions tells us much
about their judgement and their character.
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 Ethical decision-making approaches

- Two approaches for decision making that could enable

you to analyse the ethical implications of a situation
more thoroughly and to look at it from multiple angles.

- It will also help you to undertake a more informed

course of action and explain your ethical decision to
others.
▪ Five-step model of ethical decision making.
▪ 8 Ethical tests.

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 Five-step model of ethical decision
making
- These are situations of conflicting responsibilities, in
which we have to make a difficult choice between two
sets of moral values that seem incompatible -and no
matter what you choose, it will come at a cost. In these
dilemmas the right choice is not obvious.

- The following five-step model can help to resolve ethical

dilemmas in a more systematic way.

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Source: Lawton, A., J. Rayner & K. Lasthuizen (2013). Ethics and Management in the Public Sector. Textbook.
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Routledge. 196 pp. Chapter 7.
 1- Perception of an ethical problem

- Perceive that you are confronted with an ethical dilemma

within your broader decision-making situation. We often
don’t recognise the ethical dimension in our decision
making and tend to ignore the little voice inside our head
telling us that something doesn’t seem right.

- So, it is first important that you consider all the different

aspects of a situation and of the decision you have to
make – including the ethical ones.

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 2- Describing the problem and defining the
ethical issue
- Describe the problem as objectively as possible and to
define what is at stake from an ethical point of view.

- In this step it is important to gather all the information you

need in order to make a good decision -and to talk to others
to understand their intentions, feelings, and involvement in
the situation as well. You might consider the following
questions:

• Who are the people DIRECTLY involved in the situation?

• Do you know their viewpoints on the issue at stake, and
have you taken those on board?
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 • What are the interests of other relevant stakeholders,
within and outside the organisation, for example
colleagues, clients, citizens, or maybe even society on the
whole?

- The aim of this step is to clearly define the ETHICAL issue.

You therefore need to consider whose viewpoints need to be
questioned from an ethical perspective and identify the main
ethical risks and challenges.

- You need to list and prioritise the moral principles and values,
responsibilities and obligations that conflict or compete in
your dilemma.

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 3- Identifying all alternative options
- Determine the actions you can take.
- Determine the pros and cons of each.
- Draw on the knowledge of ethical theory to help you in
making a conscious decision. Equally important is to
reflect on what your intentions are when making your
decision -and on how the different options fit with your
own moral values and norms.
- Narrow down all possible solutions to the dilemma and
choose the best options for your decision making.

Can you still look at yourself in the mirror when you choose
one course of action over the others?
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 4- Projection probable consequences
- Predict the probable consequences of these different scenarios
and consider the results that each of the alternatives could lead
to.

- Determine whom or what your decision affects in short and

long terms.

- It is also a good idea to consider ways to compensate the

interests of parties that are disadvantaged by a course of action
that you might take.

- Before making a final decision, it might be wise to ask for

advice and discuss your options with people you trust (for
example, governments sometimes encourage community
dialogue to push for the adoption of a certain law). 24
5- Selecting an alternative as a state of resolution

- Select one alternative to resolve your dilemma.

- Choose your best course of action.

- Make the decision.

- You need to be aware that although YOU might be

satisfied with your decision and believe it is the right
thing to do in the given circumstances, you might still
have to explain it to others to gain their respect and win
their support.
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 8 Ethical tests
The following 8 questions can help us make a good ethical decision in
any situation (Dr. Tom Lickona, Character Matters):

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 Case study
Hypothetical business situation
You should meet/beat your retail sales targets for this month,
otherwise you’d be fired. You’ve to mess with the
company's financial books, if you want to survive for
another month.

What will you do?

Discuss in groups what would you do?

What would be your decision?
Apply 8 ethical questions to you decision.
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 Recap
Ethical decisions: We discussed the Titanic case and how ethical
decision can be made.

Ethical decision making:

• We discussed type of decisions: routine, complex, short-term,
long-term, involve factors that include financial and legal
implications and, increasingly, those implications are of a
social and ethical nature.
• Decisions in businesses operate in a dynamic environment
that is why they are often problematic.
• Business leaders are responsible to make strategic decisions.
• A decision conforms to the law does not make it an ethical
decision. 28
- Case study: L’Oreal
• L’Oreal claims that they are cruelty-free and they do not test
on animals.
• However, L’Oreal Paris sells in China stores, which means
they must consent and pay to have their products tested on
animals. That is why they cannot be considered cruelty-free.
• They lost their competitive advantage

- Ethical decision making approaches

Two approaches for decision making that could enable you to
analyse the ethical implications of a situation more thoroughly
and to look at it from multiple angles.

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- Five-step model of ethical decision making
1- Perception of an ethical problem
2- Describing the problem and defining the ethical issue
3- Identifying all alternative options
4- Projection probable consequences
5- Selecting an alternative as a state of resolution

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8 Ethical tests
Eight questions can help you make a good ethical decision in any
situation:
1- The Golden Rule Test
2- The Truth Test
3- The What-If-Everybody-Did-This Test
4- The Parents Test
5- The Religion Test
6- The Conscience Test
7- The Consequences Test
8- The Front Page Test

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Thank you

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