Business Ethics of Tiger Automotive - Essay Example

? Registration number: Topic: Business ethics unit Question Two: Scenario for business practise survey question 2: Word Count: 2160 Ethics comprise morality and moral issues. Ethics should be practised are intertwined in the present corporate world. This has been brought about due to laws that have been enacted in pursuance of series of corporate scandals that were witnessed in the corporate world that included; Enron, WorldCom and Tyco companies among others. As a result, most organisations have been compelled to implement ethical practises as a norm in running businesses through signing of ethical code of conduct that governs them. Tiger Automotive has an original product that has the advantage of having the patent for a fuel-efficient device, and at the same time, the product is beneficial to the consumer as it increase the average car’s mileage by about 45%. More importantly, the patent right protects the company’s product from direct competition hence a complete monopoly in the market which means the company is a price giver. This has resulted in the product being priced at ?45 even though the total cost is ?1. The ethical dilemma is based on overpricing product. However, a manager is faced with the dilemma of maintaining the moral standard of adopting actions that would be preferable to the self-interest of the company of maximizing profits without considering the interest of the public especially the consumers. This dilemma is supported by the fact that the organisation is responsible for its corporate acts that emanates from choices and actions of human individuals, who are the primary bearers of moral duties and responsibility of the organisation and its act. Tiger Automotives has the responsibility of upholding the shareholders objective of maximising profits and shareholder value. This is an objective that is supported by Adam Smith’s ‘invisible hand’, which supports this as an ethical way of achieve the best self interest of the stakeholders. At the same time, Tiger Automotives has the economic responsibility of generating the greatest profits for the company and benefits for society depending on the Pareto optimality whereby the markets are fully competitive, all customers are fully informed and all external and internal costs are fully included. In the same light, Tiger Automotives has the legal requirement of taking the action that fully complies with the law. This is because the law in a democratic society represents the minimal moral standards of all the people within that society, provided it can be shown that the self-interests of the various groups including individuals, groups and organisations have been included in the formulation process. Using the requirements and responsibilities explained above, this scenario creates an ethical dilemma for the manager. Ethics as defined by Velasquez (2001) can be perceived to be the study of morality and moral standards. The moral standard that the manager is faced with is adopting actions that would be preferable to the self-interest of the company of maximizing profits without considering the interest of the public especially the consumers. By putting their interest in front of the interest of the stakeholders, it is perfect to state that the manager has a moral dilemma due to the fact that the organisation is responsible for its corporate acts that emanates from choices and actions of human individuals, who are the primary bearers of moral duties and responsibility of the organisation and its act. In any organisation, its business ethics practices should be geared towards advancing moral standards as they apply to business policies, institutions, and behavior. According to Velasquez (2001), business ethics need to include analysis of moral norms and values. As a result, its implementation should be in its practice especially in systemic and corporate issues that are ethical and are concerned with individual, society and organisations. The manager, while acting as an agent of the organisation, would feels that he/she is pursuing the financial interests of their firm and the shareholders in general, which the company would argue by itself, ensure that the members of society are served in the most socially beneficial ways. However, it can be argued that due to the fact that the company has the patent right for the highly priced fuel efficient device, it has a monopoly market hence it is not in a “perfectly competitive” market. The act of overpricing the device is immoral. Hence, the increased profitability is not necessarily socially beneficial since not all in the society are shareholders and at the same time members in the society especially the poor and disadvantaged cannot participate in the marketplace and finally, the moral standards as defined by ethical relativism proves otherwise. However, the theory of ethical relativism can be inferred to explain the fact that whatever the majority in the society believes about morality is automatically correct. Hence given the fact that the society would assume that the company is being immoral due to the moral standards of the society that is considered to be the only criteria by which the action of the society can be judged, and then this would bring about fundamental problem with ethical relativism in the company. In order to be able to save the ethical dilemma in a company, it is important that for Tiger Automotives, ethics in business should govern all voluntary human activities. This is because business is a voluntary human activity (Manuel, 2001). This argument holds water because as argued by Manuel (2001), any business exists because of the surrounding community. Therefore, their workers need to adhere to minimal standards of ethics as prescribed by that society. To be able to implement the most ethical course of action, the manager has the moral responsibility of informing the organisation that it has a duty of achieving its corporate act of following ethical standards that would be at the best interest of the organisation and the stakeholders. The manager should be able to inform the shareholders that ethics is good for business. Corporate ethics in the present world is being considered in terms of short-termism vs. long-termism, hence the business should focus on long-term stability and growth, and not short-term focus that are aimed at earning per share income as a result, and the company would be considered to be ethical. According to Kantian thought, agents in business are required to detach themselves from personal motives, relationships and commitments in answering moral questions in favor of an appeal to general principles that enforce rational uniformity in our moral lives. Kantian thoughts are also related to rule based moral standards that should be maintained by an organisation and its agent (Smith et al, 2001). Using the Kantian moral principles, effective moral judgment in business ethics should be identified based on suitable set of moral principles and judgment. At the same time, according to the principle of distributive justice, any organisation is duty bound to assist burdened societies with opportunity of being well-ordered whereby human rights would be respected including the right of having the means of subsistence as a means of regulating economic and social inequalities among societies (Heath, 2002). Tiger Automotives should advocate for utilitarian standard of morality; that advocates for activities that reduces social costs and increases social benefits. Importantly, any action that affects the stakeholders in the society in a negative way by distributing negative benefits and burdens would be perceived to be violations of people’s rights to freedom and well-being. In selecting the best course of action, Tiger Automotives should adopt the consequentialist approach that would provide for results that is beneficial to the society as a whole, a principle that would be termed as Utilitarianism which holds that actions and policies should be evaluated on the basis of the benefits and costs they will impose on society. As mentioned by Manuel (2001), the most appropriate approach of measuring the ethical consideration in any business or any other thing in the society is by undertaking cost-benefit analysis, which is based on utilitarianism. Utilitarianism principle as stipulated by Jeremy Bentham (1748-1832) holds the view that any action can be ethically right if and only if summation of all utilities that is produced by a business act or process that agents undertakes have greater utilities than problems, harm or cost. Hence, as a manager, he/she should be able to measure cost (harm) and benefits (both direct and indirect) that are produced by an action to be able to achieve an alternative that produces the greatest sum total of utility which is ethically appropriate course of action. Utilitarianism is about social benefits and economic factors as well as less tangible ones such as well being and happiness. Therefore, it is important to consider Egalitarians, which advocates the fact that all happiness ought not to be at expense of other's misery. As a result, the moral good acts for the utilitarian should be considered in the level whereby they tend to bring about increased happiness to a bigger number of people due to their consequences. Bentham advocated for the fact that what is good is pleasures or happiness. Bentham and Mill (1806-1873), maintained that what is bad is pain or unhappiness. Hence, as a result, an act will be perceived to be best if it results in a balance of pleasures over pain. If Tiger Automotives reduces the price of the fuel saving product. This is called utility or the principle of utility. The managers and directors of Tiger Automotives in using utilitarianism should inform the company that its perceived behaviour towards the society may have a negative consequence towards the company especially if the society assumes that the organisation is benefiting itself without any commensurate measure towards the society. This information can be expressed in quantitative terms or on shared and common sense judgments of the comparative values of things that the society values. Hence, given the fact that the society perceives its product as essential in their livelihood, it is important for Tiger Automotives to value the benefit of increased fuel efficiency as an instrumental good and is beneficial to the society livelihood. Tiger Automotives has a moral responsibility of ensuring that it implements the basic principle (rule) of utilitarianism, which limits utilitarian analysis to evaluations of moral rules. The company would ensure that in setting the price for its products, it should not think of the amount it will lose in terms of profit but ask whether setting the price of the product at a particular level is a moral path that every stakeholder should adopt. This would result in the organisation adopting the “correct” moral rules that would produce the greatest amount of utility if the action evidently correct from an ethical point of view. This is considered correct if the sum total of utilities produced is advantageous and everyone needs to follow that rule because it is greater than some alternative rule. According to Rule Utilitarianism, an action is right if it conforms to set of rules that is morally binding to everyone in the society of the agent, except for the retention by individuals of already formed and decided moral convictions. This is likely to maximize intrinsic value of the organisation according to Streiffer (2000). It is important to note that any organisation should be ethical correct in all their endeavors. In addition, business objectives out to be based on long term strategies and the business relations should be based on long-term faith. For any organisation, its conduct should be ethical because if it is unethical then anything it does will be considered to be unethical. Just as warren buffet in his maiden address to the shareholders of Berkshire Hathaway Company, a code of ethics ensures that employees does not do things that are likely to appear in front page of local newspapers as bad news to the extent that it undermines the reputation and profitability of the company. This is because it will not only impact the company negatively but cause considerable pain and embarrassment to their spouses, children, friends and other relatives. In conclusion, every manager has the responsibility of upholding the shareholders responsibility of maximising profits and shareholder value while at the same time upholding ethical codes by following ethical standards that would be at the best interest of the organisation and the stakeholders. Tiger Automotives should ensure that they do not violate people’s rights to freedom and well-being. The company should reduce the price of the fuel efficient device to level that is in tandem the utilitarian standard of morality that advocates for activities that reduces social costs and increases social benefits by adopting the consequentialist approach that would provide for results that is beneficial to the society as a whole. Tiger Automotives should ensure that shareholders and directors are using rule-utilitarianism that would ensure that the organisation adopts “correct” moral rules which would result in greater amount of utility for the consumers if the action is right and correct than some alternative rule. Finally, Tiger Automotives should be ethical based on long-term strategies that are related to business as this would ensure that they have a longer period of survival and help build long-term business relations with stakeholders. 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