This Study Resource Was: Utilitarianism

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Utilitarianism
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Utilitarianism
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Introduction
Utilitarianism is an ethical theory, which states that any action should lead to happiness.
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Not only the person who commits this action, but also all people who are affected by it, should
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be happy. Unlike egoism, utilitarianism states that a person should take care of the interests of
other people too (Duignan, n.d.). Utilitarianism is widely used in business. Many researchers
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consider it the best business ethics because it provides benefits both to the business and to its
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stakeholders, and allows the business to develop efficiently. In general, utilitarian business is
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more respected and has better chances to develop (Gustafson, 2013). There are many examples
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of this ethical approach in business. For instance, if a pharmaceutical company produces only
drugs that are approved by the government and have minimal side effects, it is utilitarianism
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because the company takes care both of its own revenues and of the customers’ safety. One more
example is a company that offers products of different price levels to satisfy the needs of all
customers (Workplace Example of Utilitarianism Ethics, 2014).
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In the following paragraphs, I will introduce utilitarianism by analyzing five cases, which
are the case of Enron, The Parable of the Sadhu, Hacking into Harvard, Challenger Disaster and
the case of Wal-Mart.
Five case studies regarding utilitarianism
The Case of Enron

Five business cases were chosen to apply utilitarianism to them. The case of Enron
describes the situation with the company that occurred at the beginning of 2000s. The financial
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situation of the company was not very good, but it covered it, and most stakeholders considered
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the company reliable. The managers of Enron focused on personal benefits and large revenues
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without a basis for them. To do that, they provided some fake operations. For example, in order
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to cover the huge debt of the company, they constructed a series of fake partnerships. As a result,
the debt was hidden, and stock price grew significantly. However, its price was not justified.
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After the situation was disclosed, executives were imprisoned, but stakeholders were harmed
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dramatically. Executives were not the only ones responsible for this failure. Investing banks,
rating agencies, auditors and partners might have noticed the suspicious situation. However, they
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did not inform the authorities about it. The partners, including investment banks, rating agencies
and analysts, received large sums of money from the company, and provided fraudulent
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information about it.

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The case of Enron is an example of a situation when companies, organizations, and
individuals take care only of their own benefits, and they are ready to commit a fraud for those
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benefits. If we study this case in terms of utilitarianism, the behavior of all parties responsible for
Enron failure is not utilitarian at all. Enron and its executives, investing banks, auditors, analysts
and other company’s partners were not utilitarian. When they provided fake information, they
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knew about it, but continued with such a policy for monetary benefits. They did not take care of
investors and other stakeholders who lost much because of the company’s stock’s failure. Their
behavior was not utilitarian because they did not take care of all people who were influenced by
their decisions. It was egoism, not utilitarianism.
The Parable of the Sadhu

This case is devoted to a situation with a businessperson who had a trip to Himalayas.
Therefore, their group found a sadhu, Indian holy man, who was close to death. The opinions of
group members on the situation were different. The author describes the situation as a
controversy between typical business ethics he was used to and human ethics. Those group
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members who liked business ethics stated that they would not help that man because they would
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not receive any benefits from this action. Moreover, they did not want to take any responsibility.
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In case the man died, they did not want to be guilty. They stated it was not their problem, and
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they would not save the pilgrim. However, the author and some other group members decided to
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save that man. They did so, and the situation caused many thoughts because it showed the
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difference between common business ethics they used in the life regularly and non-business
ethics they used in the case with the Indian man.

This case represents the example of controversy between business ethics that is mostly
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egoistic one and utilitarianism. There were two groups of people present who were guided by
egoism and utilitarianism. The group that used typical business ethics based on egoism refused to
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save the Indian man because they were not receiving any benefits. The author decided to save
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him because he based his decisions on utilitarianism. He decided to help the man because it was
useful for him.

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Hacking into Harvard

This case is devoted to the situation with potential students who were admitted to
Harvard. According to the rules, they do not know if they were admitted or not until the
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particular date, though the results are already present. The results are stored in free access, and
every students can see them, using personal id and knowing the particular URL where results are
stored. However, many students wanted to know about the admission in advance. Several
hackers decided to find the way and discovered URL where the results were available. Each
student had to use personal id to see them. It was impossible to see the results of other students.
In addition, some students failed to see the results as they could only see blank pages. Harvard
administration soon discovered this fraud and found the students who were trying to see their
admission results in advance. The administration of Harvard decided not to admit those students
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because of their unfair behavior. The purpose of the university is to teach good and honest
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leaders. Public opinions on the issue were different. Some people agreed with the administration
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of the university, and some stated they were not right because the students did not violate
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anything.
This case shows the controversy between utilitarianism and egoism. The university could
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have admitted all students because it was beneficial for it. Students pay for tuition and other
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services. However, the administration representatives used utilitarianism in their decision. They
focused on the honesty and did not admit dishonest students. This decision was not beneficial to
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the university because it did not receive tuition fees from those students. Students lost their
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ability to study. Therefore, the administration used utilitarianism in a form of giving benefits to
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the whole society. Being dishonest is not good, and the university stopped dishonesty issue.
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However, to my opinion, the decision was too strict. The students just used URLs; they did not
implement any hacking software. Moreover, their ability to see the result did not cause harm to
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anybody.
Challenger Disaster
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This case focuses on the disaster of Challenger in 1986 and ethical issues related to it.
The main reason of the disaster was the low temperature. Engineer Roger Boisjoly informed
NASA on this issue. He warned about the possible disaster several times, but his warning was
ignored. After the disaster, this engineer was included into the team that investigated the disaster
and its causes. However, when he showed the results of the investigation, he was isolated from
the research. As a result, NASA had a disaster because it ignored the warnings.
This case shows the controversy between egoism and utilitarianism. NASA is an example
of an egoistic company in terms of its ethics. The Challenger release was supposed to show the
power and success of NASA. It seems that NASA did not take much care of the safety because it
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was focused on personal benefits. In contrast, Roger Boisjoly used utilitarianism. For him, there
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was no use warning about the possible disaster. He did not receive benefits for it. However, the
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engineer warned about the possible disaster because he took care of astronauts. His thoughts
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were utilitarian as he thought not only of his personal benefits, but also of the health and lives of
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other people.
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The Case of Wal-Mart

This case is devoted to this retailer and its influence on the economy as a whole.
Currently, Wal-Mart is the largest retailer in the USA. It regularly opens new stores and attracts
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more and more customers. Every week, about 138 million shoppers visit its stores. Wal-Mart
controls about 30 percent of household goods market, 15 percent of magazines market, and about
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35% of all food sales in the US. Moreover, Wal-Mart imports about 10% of all goods from
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China. The main reason for the company’s total success is its low prices. Due to the large volume
of sales, Wal-Mart can allow low wholesale prices. Moreover, it puts pressure on its suppliers to
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make them lower wholesale prices. In general, Wal-Mart is beneficial to customers due to its low
prices and wide choice of goods. However, its activity is not very positive to the American
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economy. In many areas, its competitors close because they cannot compete with Wal-Mart in
terms of low prices. Moreover, Wal-Mart often uses tax breaks. Wal-Mart does not support labor
unions, and wages for its employees are low. Employees usually do not have health insurance,
and government is forced to help them. Competitors close, and Wal-Mart continues its
expansion. As a result, consumers have a narrower choice of goods.

This case shows that the company does not use utilitarianism in its business decisions.
Wal-Mart is a typical business egoist. It takes care only of its own expansion and growing
revenues. It sets low prices and puts pressure on its vendors to make them decrease the prices.
The employees are not protected, and their wages are very low. Moreover, they do not have
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benefits. Competitors are in very poor conditions, too. The competition is not fair. In terms of
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utilitarianism, such policy is not ethical. The company makes decisions for its own benefits, and
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competitors, employees, and vendors suffer. The policy of Wal-Mart is not utilitarian. In future, it
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may result in different ethical issues.
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Conclusion
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This task was interesting for me. In general, I have studied much interesting and useful
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from it. I studied the main features of utilitarianism as an approach to ethical decision which
states that all people influenced by the decision should benefit. Utilitarianism states that a person
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should make decision beneficial not only for him/herself. Therefore, utilitarianism can be called
an opposite to egoism when a person takes care only of individual benefits. In business,
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utilitarianism is widely used. Some researchers state that this ethical approach is the best to the
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business because if the company takes care of stakeholders and the environment, it has better
chances for development. However, the cases showed that not all businesses use utilitarianism in
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their decisions. Many of them are egoists. Business egoism can cause many issues for vendors,
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customers, employees, competitors, and the whole economy. Thus, businesses and organizations
should try to be utilitarian in their decisions if they want to succeed.
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References
Duignan, B. (n.d.). Utilitarianism. Retrieved from
http://www.britannica.com/topic/utilitarianism-philosophy
Gustafson, A. (2013). In defense of a utilitarian business ethic. Business and Society Review,
118(3), 325-360.
Workplace Example of Utilitarianism Ethics (2014). Retrieved from
http://futureofworking.com/workplace-example-of-utilitarianism-ethics/
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1

customers (Workplace Example of Utilitarianism Ethics, 2014).

the case of Wal-Mart.

Five case studies regarding utilitarianism

The Case of Enron

information about it.

The case of Enron is an example of a situation when companies, organizations, and

their decisions. It was egoism, not utilitarianism.

The Parable of the Sadhu

ethics they used in the case with the Indian man.

useful for him.

Hacking into Harvard

The Case of Wal-Mart

expansion. As a result, consumers have a narrower choice of goods.

should try to be utilitarian in their decisions if they want to succeed.

Duignan, B. (n.d.). Utilitarianism. Retrieved from

Workplace Example of Utilitarianism Ethics (2014). Retrieved from

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