Business Law and Ethics: Climate Change and its Impact on Competitiveness in Automobile Industry - Assignment Example

Due: Business aw and Ethics Question One Climate Change and its Impact on Competitiveness and Value Creation in Automobile Industry Today’s business world that is characterized by intense competition, customer rapid responses and pursuit of high quality products, companies face stiff competition from customers. This implies that employers must incorporate strategies that will ensure a competitive success in the face of these constraints. A careful industry review is imperative for strategic managers. Assessing the Strength-weakness-opportunity-threats (SWOT) is all that concerns the management. One of the environmental factors that affect the success of the business is the climate change. Carbon emissions are dangerous and therefore undesirable in the country. Companies that put this factor into consideration set de facto standards and, therefore, have a competitive advantage. The paper will examine how the effects of climate change on automobile will affect their overall performance in the industry. This may call for adoption of new technology that is both low cost and will ensure high quality of products. Carbon constraints determine the convectional value drivers within the industry that will significantly create challenges for senior managers. Carbon constraints interact well with established efforts to improve fuel economy that will eventually drive prices up. This implies that climate change will have differential impacts on company’s financial performance by creating a distinction between those companies that will ultimately be exposed to these risks. The traditional business model, which is based on tradition measures of demand and supply that affect tangible measures like sales volume, pricing, margins and profitability, and intangible measures like brand recognition, innovation and quality, will be affected. Management’s concern will be to conduct business operations with alignment of strategic missions in a world faced with declining profits, tighter policies and shorter product life spans. Companies will be forced to adopt a carbon-friendly technology to reduce carbon emissions as this will have the potential to alter long-term competitive balance within the industry. However, the biggest challenge is to determine which technologies will be accepted by the markets standards. An example of technology utilized in the automotive industry is the incremental technology which will offer opportunities for the fuel economy. Companies will also be forced to adopt a merger strategy of partnering will others which an aim of reducing costs. New entrants into the market will face high overhead costs compared to those already in the market for similar customers. The climate change may also cause significant improvements in the fuel economy that could in turn alter demand and supply patterns for vehicles. Adoption of fuel saving technologies by companies like Toyota may in turn aid create valuable cars that will save fuel costs. Carbon constraints will alter the management competence in order to align themselves in the market with the aim of creating a competitive edge, for instance, Toyota has a leading edge in exposure to risks while PSA fall behind in exposure to risks thus has low market share in the market. Toyota emerges as the most positioned company in the industry with regard to carbon constraints while ford and GM appear to be the least positioned with regard to carbon constraints measures. A survey shows that there is a negative correlation between EBIT and rate of exposure to these carbon constraints measures, which implies that a company which does not fully support such a carbon reduction program risk reaping leaner profits as compared to their competitors, which have these measures already in place. Question Two Stephen Kelman’s Cost- Benefit Analysis critique Taking actions involves counting the expected costs and the expected benefits to establish a feasibility viewpoint about whether to take up the action or to abort it all. Cost- benefit analysis, for many, acts a tool in their decision making process. It is a systematic approach that involves thinking about these vital steps in life: decision making. It is applicable in several areas and environmental, safety and health issues is no exceptional. However, due to several incidences of its nature, it is noted that a certain action might be right even though its benefits outweigh its costs, which will make one reject this approach. Similarly, it is noted that even economists who claim to adopt this approach are likened to philosophers who are ignorant about the usage of the theory. According to the author, just because an action causes maximum attainment of satisfaction, then the act is right. This is fallacious as there are certain actions which are morally right and whose benefits are less than their costs. Another reason is that both the positive and negative impacts go beyond these very acts’ immediate consequences. Several examples have been cited in support of the flaws of the cost-benefit analysis. First, utilitarianisms will impose moral sanctions on morally wrong acts like telling lies, killing or even depriving someone’s freedom. These actions causes a maximum satisfaction to whoever is telling this lie, killing or even arresting and convicting the innocent person as a deterrent measure. It is noted, that a man who contemplates speaking out against Hitler and losing pensions, will be morally wrong, according to utilitarianism as his action of speaking out rightly against Hitler will be costly but with no benefit at all. The approach tends to ignore this fact of long-term consequences of an action: the approach is myopic in nature. Utilitarianism, however vital and powerful, holds a minority position among the modern moral philosophers. For example, in efforts to decrease crime, the police arrest an innocent man. It is noted that this is an error of interpretations as the action is morally wrong to arrest, fabricate a story and later convict an innocent out of knowledge that he/she is indeed innocent. Cost benefit analysis is based on several assumptions which only limit the theory. For instance, it assumes that there is no difference between public and private behaviors. In addition, pricing of some things will tend to reduce its value: rights to vote, friendship, freedom of speech, buying human life, love and affection among others. Similar issues have been echoed by the Delong, who says that the approach ignores the realities of life and are inconsistent. In a similar account, the cost benefit is biased, flawed and does present cases especially in environmental safety and health issues. Therefore, I agree by the arguments put against several flaws, biasness and incompleteness of the theory. Questions Three Stakeholder Theory on Value Creation by F. Freeman Companies pursue excellence in order to capture the narrow market niche so as to improve the edge for profits. It is noted that for value to be created all the company’s stakeholders have to cooperate in order to realize this goal. The companies have several stakeholders: internal stakeholders include shareholders, management and employees while external stakeholders include customers, suppliers, creditors and even the community. Each of these stakeholders plays a crucial role towards maximizing value creation. The shareholders are the owners of the company who have invested in the company by buying and owning it terms of shares. They expect a sizable share of return on their investment. They entrust the management of their company to the board of directors and managers who are oblige to adopt sound business practices in ensuring the company meets its visions and missions of growth, profitability and survival. They are charged with responsibility of hiring talented and creative employees who will in turn crate value by offering high quality customer service. On the other hand, customers are the key stakeholders as they drive the company towards profits by acquiring and utilizing products created from these companies. The products offered to them, must be free from toxics and of fit for human consumption. The suppliers supply qualitative raw materials while creditors offer credit facilities to the company so as to enable the company to operate smoothly. The government provides incentives to the investors for further expansion like reducing taxes. Finally, the communities create value by buying company’s products, offer cheap labor. Therefore, the organization ought to conduct all activities with the view of a profit (economic gain) so as to balance the stockholder’s interests of a fair return on investment. They should also carry out their operations in an ethical and with the general public interests at heart, demonstrating willingness to take a head of regulatory confrontations with the state. They should also be socially responsible for the general welfare of the community in which they serve. The theory conflicts with the fiduciary duties of the directors where it comes to discharging their duties with a duty of care and negligence. Nofalk offers great insight on the need to shield directors from direct participation in the affairs of the company as they may act willfully at their self-interests. There should be clear and stringent policies to regulate and put a ceiling on their activities so as to limit their powers and authority for a substantial state of balance. Question Four Case study (Hosmer Case 3-1) 1) The first group benefit from shipping the defective goods is the supplier group in Europe. Another group will be the chain store, who will benefit by getting a substantial share from the sale of harmful and defective foods. 2) The first group is the Board of directors, senior executives who owe a duty of care to the company in discharging their duties. Secondly, the employees might lose jobs due to lose in profits. The inner city people will be affected in terms of health. The staff owes a duty of care to inspect goods, store them in safe place for and sale them only when they are in conditions fit for human consumptions. They might attract lawsuits from the civil society which might tarnish the name company. 3) The board of directors who ought to exercise their right not to allow the defective to be shipped to the inner city and the ghetto consumers who have right not consume defective and somewhat harmful goods even if at a throw-away price. The staff has a right not ship defective goods as they are not fit human consumption. 4) The ghetto and the staff groups will have their rights ignored as they are acting out of negligence. 5) It is morally wrong to sell harmful goods even if it is to recovers some profits or rather going at a loss. 6) The economic outcomes in this case are that the company will suffer from losses, attract lawsuits and might lose trust amongst its loyal customers in the leading to low margins. There might also be legal sanctions imposed on the company that might work against its value creation. 7) The legal requirements is that the company disclose all material facts concerning the food they are advertising or selling including the current state of condition of the good, manufacturing and expire dates. 8) They should take the interests of the people at heart at arriving at their decisions as human life is so much valuable to be quantified in monetary terms. Work cited Changing drivers the impact of climate change on competitiveness and value creation in the automotive industry: Stakeholder theory: http://www.youtube.com/watch?v=bIRUaLcvPe8 Case 3-1, Hosmer: Read More