Ethics and Stakeholder Management - Essay Example

?The concept of ethics is somehow controversial though it affects almost all facets of business across the spectrum. Against this background, this essay seeks to analyse a given business practice survey and evaluate the ethical issues raised. The is divided into two parts and the first part is concerned with deconstructing the problem in order to expose the ethical dilemma which will be followed by application of a theoretical framework to arrive at the most ethical course of action that can be taken. The second part deals with implementation of the most ethical course of action that can be taken. Focus is on convincing the decision makers that the ethical course of action is in the company’s best long-term interests. Ethics basically refers to issues of right, wrong, fairness and justice and business ethics focuses on ethical issues that arise in the commercial realm (Caroll, 1996). The concept of ethics is very important during the contemporary period in the operations of any given organisation. Socially responsible businesses ought to create a balance between the protection of the interests of the consumers as well as their objectives of making profits. However, the issue of ethics is somehow controversial in that there may be conflicts whereby people may disagree over a certain issue with regards to the right course of action that can be taken. There are mixed feelings over one issue whereby others see nothing wrong about it while others view it as wrong which presents an ethical dilemma to the organisation. As such, an ethical dilemma arises when there is an unresolved interpretation of an ethical issue (Arens, 1996). This is a situation when people have different perceptions over a particular issue. In this particular case, a computer manufacturer decides not to market a new chip that would enable computers to be upgraded. This entails that there is no need for a new computer and this reduces electronic waste. However, this will lead to a reduction in the sales of the computers which means a definite reduction in revenues in the short term. On the other hand, the long term pay-off is uncertain and this has presented an ethical dilemma to the organisation. In this case, the organisation is finding it difficult to market the new chip though it will benefit the majority of the people at the expense of their need to protect the business interests of the company such as its profitability. In view of this given scenario, it can be noted that to a certain extent, there is no universal agreement of what constitutes good things from bad. Certain incidences sometime arise where people often view the same thing from different perspectives (Hiti, 1999). However, in as far as business is concerned, it can be noted that the main objective is to attain profit goals whereby ethics are at times compromised for financial gains. Theoretically, there are different ethical theories that can be applied to this case but the most ideal is utilitarian ethical theory. According to this theory, “the choice that yields the greatest benefit to the majority of people is ethically,” (Rainbow, 2002). As such, this ethical theory posits to the effect that organisations should encourage the people to work towards the outcomes that will benefit the majority of the people that are affected by the operations of a given organisation. It has to be borne in mind that businesses are concerned with serving their own interests as well as the interests of the stakeholders which should not be compromised for financial gains alone. The right course of action will be to follow the guidelines that will yield benefits to the majority of people not only the concerns of the company alone. The utilitarian theory suggests that the organisation ought to be guided by values as well as principles that will incline it to act in a certain way which makes it different from the other organisations. This ethical perspective can be applied to the given case given that it is the duty of the organisation to protect the interests of the customers who are regarded as the majority of people since the organisation mainly relies on them for its survival. The organisation should not only be concerned about its profit oriented goals but the interests of the customers at large so as to create trust which leads to customer loyalty. Where there is customer loyalty, there are likely chances of long term pay-offs compared to short term gains. First and foremost, in order to implement the most ethical course of action in this given scenario, it is imperative to establish the values of the organisation. Basically, business ethics has been defined as “the values, principles and standards that operate within an organisation and these attempt to make a distinction between business practice that is morally good from bad,” (Rossouw, 2004, p. 16). It can be noted that business ethics mainly derives from the value system that operates within a given organisation towards the attainment of the set goals and objectives. In the same vein, DesJardins (2006, p. 5) defines values as “essential and enduring tenets that help define the company and are not to be compromised for financial gain or short term expediency.” In this case, the values may include some of the following factors namely financial, political as well as religious factors and these are supposed to be of benefit to the majority of the people who are impacted by the operations of a particular organisation. In essence, the main idea of business is to make profits hence special consideration should be taken in order to ensure that there is a balance between the profit oriented goals of the organisation and the need to protect the interests of the majority of the people. As such, the most ethical course of action is to implement decisions that are based on the value system of the majority of the people. These values ought to be derived from the cultural environment in which the organisation operates. Thus, the cultural environment is made up of institutions and other forces that affect the society’s basic values, perceptions, preferences and behaviour which make us to act in different ways from the other people (Kotler & Armstrong, 2004). People as well as organisations grow up in a particular society that shapes their beliefs and values and they absorb a worldview that defines their relationships with others. In most cases, the core beliefs and values have a high degree of persistence and these shape the behaviour of the people hence there is need to incorporate some of these enduring tenets in the operations of any given business in order to ensure long term survival of the organisation. In as far as ethics is concerned, the actions of the organisation should not violate the values and beliefs of the people in which the organisation will be operating. In this case, the organisation should not compromise the values of the people at the expense of their concern to increase revenues generated from their business. If the people discover that their values are being compromised for financial gain, they are likely to develop negative perceptions about the organisation hence there is need for them to have trust in it. In order to safeguard the long term interests of the organisation, there is need for the organisation to take into consideration the long term tradeoffs of the company with regards to its profitability as well as the social responsibility aspect which concerns the fair treatment of the stakeholders-customers, community and competitors (Caroll, 1996). The interests of the stakeholders ought to be given priority in as far as the operations of the given organisation are concerned. For instance, Nestle was once dogged by controversies with regards to infant milk it supplied and this led to protests by civic groups such as churches, World Health Organisation (WHO) as well as others (Caroll, 1996). This led the company to make some concessions in its operations in order to meet the demands of the protestors. It is therefore imperative in this given scenario that the concerned organisation should incorporate the interests of the different stakeholders such as customers, civic groups as well as other non-governmental organisations (NGOs). Decisions that reflect the interests of the majority of the stakeholders help foster good relations between the organisation and its stakeholders in the long run. There is need to carry an investigation about the interests of the stakeholders such that the operations of the organisation will not violate these for the sake of long term relationships. This will be an added advantage since it will help to create a long term relationship between the organisation and the majority of the stakeholders. Therefore, in practice, the organisation must uphold principles that will attempt to balance its organisational goals as well as the interests of the stakeholders concerned in order to create long term relationships. Over and above, it can be noted that the concept of ethics is very important in the operations of any given organisation since it affects almost all facets of business across the spectrum. However, this concept is characterised by controversies in some cases whereby there may be conflicts when people disagree over a certain issue with regards to the right course of action that can be taken which constitute an ethical dilemma. In this particular case, the organisation is finding it difficult to market the new chip though it will benefit the majority of the people at the expense of their need to protect the business interests of the company such as its profitability. It has been noted that the utilitarian ethical theory is the most ideal to this situation. The most ethical course of action that can be implemented ought to reflect the values of the majority of the stakeholders so as to foster a long term relationships between them and the organisation. Bibliography Arens, WF 1996, Contemporary advertising, 6th Edition, Irwin, Boston. Caroll, BA 1996, Business and society: Ethics and stakeholder management, 3rd Edition, South-Western College Publishing, Ohio. DesJardins, J 2006 An introduction to business ethics. (2nd Edition). McGraw Hill International Edition: Boston. Hiti, S 1999, Fundamentalism and family values inside corporations: Visions of ethical business. Financial times, Prentice Hall in association with Price Water House Coopers. Kotler, P & Armstrong, G 2004, Principles of Marketing, Pearson Education International: NJ. Phillips, R., ‘Ethics and a manager's obligations under stakeholder theory.’ Ivey Business Journal Online; Mar/Apr 2004; ABI/INFORM Global Rainbow, C 2002, Descriptions of Ethical Theories and Principles, Davidson College [Online], Available at . Rossouw, D 2004, Business Ethics, 3rd Edition, Oxford, CT. Weiss, JW 1994, Business ethics: A managerial, stakeholder approach, International Thompson Publishing: California. Read More