Business Ethics - Case Study Example

Business ethics Introduction In philosophy, there are three braches of ethics one of them being applied ethics. It is under applied ethics where business ethics is classified. Business ethics evaluate the ethical principles that are relevant in the business world. Ethics refers to the moral guidelines that define what is good or what is bad. In business, there some conducts that may be regarded as unacceptable due to their moral implications and reputation in the society. The guidelines or the principles that define such conducts are what comprise of business ethics (Lamb, Joseph and Carl, Pg. 69). The focus of this essay is to give a report regarding ethics of an organization TideeKleen Waste Management Inc. It is an organization based in Canada and is concerned with the commercial waste recycling and disposal activities. The company is known for its strong reputation and corporate responsibility. It has a number of stakeholders with the major ones being Halo Ethical Fund and a New York private equity firm known as GSG Financial. These two are the majority shareholders and any decision by TideeKleen will have a significant ramification on them. The company’s employees are important stakeholders. Stakeholders Analysis The company’s major stakeholders include; its employees as well as Halo Ethical Fund and a New York private equity firm known as GSG Financial who are the majority shareholders. Employees are an important of any organizational stakeholders. They are the ones who carry out the production activities as well as any other activities within the organization and therefore they are major factors in determining the performance of a company. As such, it is important that the employer ensure that the employees are operating in a safe environment so as to ensure their maximum productivity. Employees are an important part of TideeKleen stakeholders. Any decision by the company will have a significant ramification on them and their performance. A change in the employees’ performance will be reflected in the general organizations performance. In this case, any option A, B, or C will have to be evaluated considering the effects it will have on the employees. For instance, if the company is to choose option A, the employees who will be moved to the new TideeKleen will be operating in a safe environment and their chances of contracting a cancer will be highly reduced. As a consequence, their performance is likely to be relatively high. This is even considering that most of these employees are to be young and energetic. The employees to be left in the old TideeKleen on the other hand will be working with the old equipment that will expose them to high risks. Any effect on their health will have a direct effect on their performance. Similarly, Option B will also expose employees to such risks and hence will affect their performance and morale. Option C on the other hand involves changing from the old facilities to the new ones. The process will take time, and during that transition period, employees will be working in a not so safe environment. If the company chooses an option that does not favour any of the employees, on top of the low productivity, there is a high possibility of increased employees turn over. The effect on these to the company will be low performance. The company will spend more money looking for new employees. In addition, potential employees may be discouraged from joining the company. The other class of important stakeholders are the company’s shareholders. Any decision that the company makes is likely to have an effect on its performance an in turn will affect the price of its shares in the stock exchange. Shareholders who have a high number of shares in the company will be as well affected significantly by any change in the price of shares. For instance, the prices of shares of TideeKleen have fallen from $40 to $30. This might lead to a big loss for the company’s largest shareholder Halo Ethical Fund. In fact, the company may consider divesting from TideeKleen shares if prices continue to fall. This would be a big blow to TideeKleen since loosing such a shareholder will mean that the company might face difficulties accessing funds for operations expansion. This is considering that shares are one of the methods through which a company raises extra capital. If TideeKleen chooses to go with option A, chances are that it will not loose any of its current employees. This is because each of them will be accorded one share of the new TideeKleen for every one share they hold of the old TideeKleen. Since the new TideeKleen will be expected to prosper considering the fact that it will acquired the most modern and highly effective equipment, every shareholder of the old TideeKleen will be willing to acquire its shares. The old TideeKleen on the other hand will remain with the old equipment’s which are inefficient and hence its performance will go down resulting to people shifting to the new TideeKleen. If the company goes with option B, the effect will be that the shareholders are likely to get a high divided since the operational costs will be reduced hence increased profits. However, in the long run, owing to the low technology and exposure of workers and the members of the community to risks of cancer, the reputation of the organization will be dented leading to loss of revenue and hence low share prices. In the long run the shareholders are likely to leave walk away. Finally, Option C is advocated for by GSC. It is an option that has the ability to improve the performance of TideeKleen in the long run. However, in the short run it will increase the company’s debts and hence will reduce profitability and the price of shares. The shareholders are likely to hold on eyeing the future prospects. Ethical assessment The company’s management has to consider the ethical implications that their decision will have before choosing the appropriate option. It should also consider the ramifications of the option to be chosen on the company’s stakeholders. Therefore, in reaching a decision, the company will be required to balance between the ethical issues and the stakeholders’ interests. It should be noted that each of the option will have negatives despite the positives that might be associated to it. However, the decision will be based on the weight of each option on the positive and the negative side. Ethical theories, principles and standards as well as normative Corporate Social Responsibilities approaches will be influential in picking an option. The company should be keen to fulfil its obligations to each of its stakeholders. It should therefore ensure that the decision it makes will be in line to meeting the company’s obligations to the stakeholders. As stipulated by the deontology theory of ethics, every individual should fulfil their obligations to others in their bid to address ethical dilemma (Tavani, Pg. 58). The company is expected to treat the employees in an appropriate manner. It should offer a safe environment for tem to work. The management is further obliged to ensure maximum wealth for the shareholders. So the ethical decision in this case would be the one whereby the company meets its obligation. Under the utilitarianism, the company will take a decision that is appealing to most of its stakeholders. The people will normally appeal for the option that has the most benefits to them. Therefore, the company will have to choose the option that benefits most people (Lamb, Joseph and Carl, Pg. 76). This will be the option that offers the employees good working conditions, good wages and good retirement benefits. It should further be able to maximize the shareholders wealth. As such, the option should be in a position to lead to an increased share price at the stock market. It is important to note that the relevant shareholders in this case are the employees and the majority shareholders. Therefore, under utilitarianism, as long as the decision benefits most of these stakeholders, it will not matter what effects the options will have on the others such as the community and the environment within which the organization operates. The theory of utilitarianism and the principle of beneficence are applicable in the same way. They focus on what is good for most people (Campbell and Keith, Pg. 280). According to this principle, the organization should choose the ethical theory that has the most benefit to majority stakeholders. In this case, option A seems to be the one with most benefits to majority people. First, this option is not the best for all the employees of TideeKleen. This is because it only favours the new employees and the young people who are currently joining the organization. It will provide them with a safe working environment and hence will reduce their chances of contracting cancer. On the other hand, the option is not favourable to the old employees since they will be left to work with the old facilities which are less effective and expose them to the risks of contracting cancer and other related complications. However, it should be noted that these group of stakeholders is small and they are employees who are approaching retirement and as such, by the time the old TideeKleen is becoming bankrupt as it is expected, these employees will most likely be retiring. The shareholders will also be beneficiaries from this option. Again, as it is stipulated by the utilitarianism theory and the beneficence principle, the option that benefits most people is the ethical option. The other two options though they can also be chosen have a number of limitations to the stakeholders. First, option B is likely to increase the organizational profitability and the shareholders dividends. However, it dopes not provide a safe working for the employees and this may lower their productivity. In addition, it might destroy the reputation of the company and hence in the long run, the prospective profitability will decrease. This option does not benefit the majority. In fact, its only benefit is to the shareholders but only in the short run. Option C, is likely to lower the shareholders wealth in the short run. It will increase the level of debts for the company. This will be a risk since there is no assurance that the future operations will be sufficient to cover the debts. The employees will also be exposed to the risks associated with the toxic emissions. This option does not favour ethical behaviour by the business. This leaves option A as the most favourable. Despite the fact that GSG is leaning on option C, it is also supportive of option A. the company should therefore choose A since it benefits most people; it is ethical and will also favour its business operations. Works cited Campbell, Tom, and Keith A. Houghton. Ethics and Auditing. Canberra: ANU E Press, 2005. Internet resource. Lamb, Charles W, Joseph F. Hair, and Carl D. McDaniel. Essentials of Marketing. Mason, Ohio: South-Western Cengage Learning, 2012. Print. Tavani, Herman T. Ethics and Technology: Controversies, Questions, and Strategies for Ethical Computing. Hoboken, N.J: Wiley, 2011. Print. Read More