Business Ethics: Cost Benefits Analysis

1132 words - 5 pages

An 'economic cost-benefit analysis' approach to reasoning sees actions favoured and chosen if the benefit outweighs the cost. Here, the benefits and costs are in the form of economic benefits and costs, such as, monetary loss or profit. One who is motivated by such an approach will deem a course of action preferable if doing so results in an economic profit. Conversely, actions will be avoided if they result in an economic loss (Kelman 1981).

Importantly, when thinking about the cost-benefit approach, it should be borne in mind that its proponents are not strictly motivated to act ethically, unless the cost of not doing so is sufficiently high, or if acting ethically will result in economic profit. For example, a industrial company may know that dumping chemical waste into a nearby river is harmful to the environment, and by extension, human and non-human animals, although still decide to dispose of their waste in such a manner, as it is economically cheaper to do so, than to dispose of the waste in a safe but more costly manner. In coming to such a decision, they may have also weighed the potential fines and loss of business if they are exposed, although determined that such costs are not sufficiently high compared to the economic savings of cheaper, inappropriate dumping, so will maintain the current method of disposal.

A utilitarian approach to moral reasoning is also one where different options are weighed, although utilitarians are interested in minimising harm and maximising benefit. Importantly, utilitarians hold a universal perspective when reasoning, where they consider the impact upon all those who may be affected, who have interests of their own (Grace & Cohen 2013: 14-15).

Importantly for Kant, morality must come from rational thought and it must be consistently applied. He used the term 'categorical imperative' which can be explained as: "act only according to that maxim by which you can at the same time will that it should become a universal law" (Grace & Cohen 2013: 16). Once we consider this key point, we can see that, for Kant, self-interested motivation is not compatible with moral motivation. If one were trying to solely maximise their own interests, particularly in business, it would be preferable to operate under maxims such as, 'only be concerned with yourself' and, 'wherever possible to economically exploit others without being caught, do so'. If such maxims were applied in a Kantian way, that is universalised, everyone would suffer as it would result in a situation of all-against-all, where cooperation and trust would break down. Moral reasoning requires that one consider the impact actions and choices have on others, and is not merely following one's own preferences.

In the business sphere, Kantian moral reasoning might be applied, where maxims such as, 'be fail and honest in all business dealings' can easily be universalised and happily agreed upon. Such universal maxims are also likely to benefit all parties, and...

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