The Regulatory Cycle Model and its Effect on Management Decisions - Assignment Example

Business Law Ethics Question The Regulatory Cycle Model and its Effect on Management Decisions The Regulatory Cycle Model According to Jennings (117-119), the regulatory cycle helps provide firms the necessary opportunity for them to be able to self-regulate their activities. This is often seen to be cheaper and more efficient as compared to some of the misdeeds that often tend to occupy the loophole areas of industries and markets. The regulatory cycle is seen to have a number of stages ranging from its first stage which is the crisis stage that is seen to be caused by the various excesses of monetary expansion, the crisis stage is seen to in-turn create a demand that necessitates for immediate action to be taken so as to combat the actual cause of the current catastrophe. In the second stage of the cycle, action is seen to occur and regardless of the immediate effects that might have been caused by the action, the monetary cycle is seen to move on an things eventually end up correcting themselves. The third stage of the cycle is the inefficiency stage that is seen to characteristically be marked by the inability of the market to sufficiently create wealth as a result of the actions taken during the more frantic times. The fourth stage of the cycle which is the circumvention stage is seen to involve for a lobbying of the removal of the restrictions seen to be placed in the second stage of the cycle and the development by the firms of activities designed to try and circumvent the established rules and achieve the same effects as the forbidden practices. The regulatory cycle is seen to critically affect management decisions in the automotive industry. This is exemplified that in line with the cycle, the increase in carbon dioxide emissions and the resultant attempts by various governments and organizations to try and limit or curb these emissions essentially helps mark out the first stage of the cycle. The decision making of managers in the automotive industry is seen to have been affected by the cycle as they made various decisions to try and act on the increasing CO2 emissions developing various technologies such as biofuels. Question 2: The value of Corporate Sustainability Corporate sustainability which is commonly defined as being the basic corporate response to sustainable development where the organization engages in a number of practices and strategies that are designed to ensure that the organization is able to address the key issues pertaining to the world’s sustainable development. The value of corporate sustainability can never be exaggerated as is demonstrated by the efforts by various companies to try and quickly respond to any crises that might be seen to be endangering the image of the company’s corporate sustainability as was the case seen at KFC when reports emerged of excessive animal cruelty at one of its slaughter houses. In the incident, workers were shown displaying excessive animal cruelty when they were recorded stomping on chicken, flinging them mercilessly against the wall and at times even squeezing them to death. In response to this, the company is seen to have responded quickly by sending inspectors to the plant and implemented measures that saw the contractor fire 11 of the employees and extract pledges from the employees at all the other 25 plants to treat animals in a more humane manner (Trevin?o and Nelson 323-324). Taco Bell, a fast food restaurant, is also seen to have quickly responded to a Mexican tomato pickers workers strike by improving the pay offered to the workers and promising to monitor the company’s suppliers as well as adopt an improved code of conduct that would enable the company to be able to drop any suppliers that were seen to abuse farmworkers (Trevin?o and Nelson 324). Trevin?o and Nelson, point out that by effecting a pragmatic approach to matters relating to corporate social responsibility and sustainability, it is possible for an organization’s manager to be able to effectively scan the environment in which the organization is operating in an be on the alert to be able to quickly respond and avoid economic harm to the organization and maintain the legitimacy of the organization while all the while ensuring that the good reputation of the organization is upheld. Is it more Profitable to be Ethical? A number of business organizations have at one time been faced with complex ethical dilemmas that have threatened to negatively impact on their profits. However, most business enterprises have discovered that although unethical practices might at first promise to be more profitable, any eventual public protest might severely affect the profitability of the business as was evidenced in the case of the release of the Ice-T’s the body count album by the Time Warner label in 1992. One of the songs in the album was seen to make allusions to the killing of a police officer and this precipitated an outrage that caused an estimated over 1,100 company shareholders and police representatives to denounce the company’s executive in a long five-hour session Jennings (133). However, the music label refused to pull the album and the Philadelphia municipal pension fund immediately decided to sell over the over $1.6 million Time warner holdings that it had. The public outcry over the album is seen to have been responsible for poor sales in the music album which only managed to sell an estimated 300,000 copies. Eventually, Ice-T decided to pull off the offensive cop killer song from the album and in an annual general meeting, the company decided to not distribute music that had been deemed as being inappropriate. This eventually left to Ice-T leaving the company because of what was termed as creative differences Jennings (133-139). Question 3: Freedman’s Model of Stakeholder Analysis and its Application to Corporate Social Responsibility Freedman’s model of stakeholder analysis is seen to have a similar logic to that of the stockholder theory. In the more traditional stockholder theory, the shareholders or the stockholders were normally viewed as being the owners of the company and as such the company was seen to have a somewhat binding obligation to ensure that it put their needs first and always act to try and increase their value and revenue. However, as opposed to this, Freedman’s stakeholder theory is seen to argue that there happens to be a number of other parties involved in the interests of the company and it is critically important that their needs also be considered. These additional parties include the employees, the suppliers, the local community, the management and the owners. The Freedman’s model of Stakeholder analysis is seen to make a positive contribution to corporate responsibility as it ensure that the company seriously considers the needs of the local community in which the company is located and endeavors to try and address them. Freedman argues that in line with the stakeholder model, the firm cannot be able to expose the community to any of a number of unreasonable hazards such as toxic waste and pollution. The freedman model of stakeholder analysis can be argued to somewhat conflict with the fiduciary duties of a company’s board of directors and its management to always ensure that the company tries to make as much money as possible while ensuring that the company conforms to the basic societal rules (Jennings (91). This is because the activities involved in catering to some of the needs of the other stakeholders in the company will essentially increase the company’s expenses which will then translate into a reduction of the wealth of the shareholders. Some of these activities might include expenses such as the increasing of wages paid to the company employees or the incurrence of additional expenses in an attempt to try and minimize the emission of pollutants. Question 4: Hosmer Case Study The groups that stand to greatly benefit from the established policies on the harmful benzene emissions and worker safety are mainly the company’s executive which will be able to avoid incurring any possible expenses involved in upgrading on and improving on the company facilities so as to reduce the emission of benzene to the accepted federal standards of a maximum of 10 parts per every million parts. The group that stands to lose the most under the current ineffective company policy are the workers working in the drying shed where the benzene emissions are at a dangerously high level, these workers stand to suffer a number of health risks such as birth defects and leukemia. The group that will be able to exercise their rights by failing to sufficiently address the worker safety problem at the chemical plant is essentially the plant’s management. This is because they will be able to avoid any expenses that might be involved in resolving the worker safety problem, this will in turn then serve to cause them to be seen to be effectively performing their duty of working towards sufficiently maximizing the profits that the plant’s shareholders stand to gain. The group that stand to have their rights ignored by the current company policies is primarily the workers as they are seen to be left exposed to the harmful effects of the benzene. The main moral problem in this scenario is that the workers are seen to constantly be at risk of some fatal health conditions as a result of exposure to benzene, on the other hand, the company’s mid-level management had taken it for granted that no considerable action could be taken as requests to the executive to have the situation remedied had always been overlook, this is in addition to the fact that there were no workers that had been affected by the benzene in the plants history of operation despite the fact that it was a sign-on-job and nearly all the company’s employees had had to work at the dangerous drying shed before they could be transferred to some of the more desirable job positions. The plant manager also indicated that insisting on the project might potentially cause him to be fired. On the other hand, the company’s executive could not understand the need to improve the working conditions as such a project could not be able to show an accurate return on investment. The economic outcomes of the scenario are that although the company will continue to make sufficient profits in the short run, it might eventually face legal action if any of the workers ends up contracting leukemia or happens to have children with birth defects as a result of the exposure to benzene. This will cause the company to incur serious legal costs as well as be forced to eventually remedy the situation and build a suitable drying shed that will sufficiently reduce the amounts of benzene to the acceptable federal standards. The legal requirements are that the company should ensure that it revises its policies on benzene and workers safety so as to shield itself from any future prosecution as a result of exposing its workers to harmful chemicals. Its moral duties include its upgrading of the drying shed to ensure that the facility is able to reduce the benzene emissions to the set federal standards so as to effectively shield its workers from any possible benzene related health complications. A solution to the dilemma would be for Susan to present to the company’s executive board a report detailing the potential harm to the health of its workers that is posed by the exposure to benzene, and the legal repercussions that might follow if the exposed workers contract any health complications and decide to sue the company. She should also present this report to the local state health and safety agency and forward another copy of the report to the Occupational Safety and Health Administration (OSHA) Federal Agency for further action. In the report forwarded to the company’s executive, she should also detail the fact that she has forwarded the report to the various concerned government agencies; this will serve as a further incentive for action on the part of the company’s executive. Works cited Jennings, M. Business ethics : case studies and selected readings. Australia ; Mason, OH : South-Western, Cengage Learning. 2012. Print. Trevin?o, L. and Nelson, A. K. A Managing business ethics : straight talk about how to do it right. New York : John Wiley. 2011. Print. Read More