An Organizational Ethical Dilemma - Coursework Example

A class action lawsuit was brought against Rite Aid by its employees because of the incurred losses in shareholdings and income due to the bookkeeping and accounting fraud ("Rite aid faces," 2003) The company’s reputation was severely hurt by this scandal and lost nearly a billion dollars in legal fees and in the shareholding settlement reached for the class action lawsuit. The company lost its good reputation and fell behind similar stores such as CVS and Walgreens ("Rite aid faces," 2003) The Ethical Issues There are several ethical issues that are illustrated in this particular incidence.

The biggest issue is the breach of fairness. According to the book entitled “Managing Business Ethics,” a major aspect of ethics for most employees in an organization is the “climate of fairness” (Trevino, & Nelson, 2010). A climate of fairness involves all aspects of employee treatment such as “outcomes, processes, and interactions (Trevino, & Nelson, 2010). In order to be considered ethical, this climate of fairness cannot be breached. In this case, Rite Aid did not provide a fair work environment as employees were harmed in the all three of these key areas because of the fraudulent actions of several men.

Instead, the company promoted a self-interest climate which is where “people protect their own interests above all and everyone is essentially out for themselves” (Trevino, & Nelson, 2010). Martin Grass and his accomplices placed their own greed above the good of the other employees and shareholders and ended up defrauding many of these people out of the money that they were entitled to ("Rite aid faces," 2003) Who is affected by the dilemma? The employees and shareholders were the individuals that were initially impacted by this ethical scandal due to the fact that they were the ones who lost out on the money they were owed.

In order to rectify this situation, a class action lawsuit was filed and eventually the company had to pay out. The company was also affected by this dilemma as their reputation was ruined and they lost a lot of money because of the legal fees and profit loss. Finally, the customers are also affected because such a breach of ethics is going to change the perception of the organization. Customers likely felt that this was not a company they should trust. The fact that profit was impacted suggests that customers did not want to be associated with the store and its negative reputation.

What are the possible consequences of specific and alternative actions (responses)? The company really did not have any other choice when it came to how they responded to this ethical dilemma. In order to save face in the long-term, they had to pay back the money to shareholders and employees. The only way to ensure that they were not ruined was to accept the short term consequences and respond appropriately. Had the company not responded appropriately, they might have been forced to go out of business.

Even with an appropriate reaction, Rite Aid lost billions and their stock plummeted to just a few dollars per stock in 2003("Company news; rite," 2003) What are the relevant obligations from your analysis of the dilemma? According to “Managing Business Ethics,” the obligations for a company “vary depending on the people involved and the roles they play (Trevino, & Nelson, 2010). For Rite Aid, the main obligation that they had was