Commerce Reflective Paper - Essay Example

Name Class Unit Week 3 tutorial submission overview Responsible commerce involves carrying out business in a manner that ensures the owner is responsible for the business, workers and consumers (Karna, Hansen, & Juslin, 2003). It means addressing moral and ethical problems that arise in the business environment. In society, an example of unethical business practices has been observed in sweatshops. This involves multinationals setting up industries in developing countries where workers are mistreated. Workers in a sweatshop are poorly paid that their counterparts in developed countries. Despite the fact that sweatshops have been operating legally and having benefits such as a provision of employment in poor countries, they are unethical. They do not offer protection to workers and contributes to environmental pollution. This shows a business that is only concerned with making profits but does not care about ethics. General Motors (GM) Action A responsible business must address both moral and ethical issues (Singer, 2013). GM motors failed to act in a responsible manner after learning of a possible failure in their cars. After the crashes had occurred related to their cars, GM failed to open up fast investigations. The company lack of initiative to responsible business led to 13 fatalities and lawsuits. Lack of responsibility by GM led to suffering to the affected families who lost their kin (Jensen, C., 2014). GM knew that Cobalt model had a problem since 2004 when they were launched. The company learnt that Cobalt had an ignition problem even before they left the assembly plant. There had been instances that acted to how that Cobalt was not safe for the users. When the company engineers suggested a fix, the management did not agree. The management focused on lead time and cost instead of user safety. GM did not inform its employees on safety problems their products had. The company took almost a decade to address the issue that had already led to the loss of lives. The company decided to take recall as the last option while it would have been the first option. Despite the apologies made by GM, it is evident that they failed to act responsibly in the business (Jensen, C., 2014). The company actions were only directed at gaining profits while ignoring customers’ safety. My reaction to the case The GM case makes one feel enraged with business operations whose only focus is profit. One feels sad and offended by the practice. How can a business that learned that their products had fatal effects on consumers continue selling it? This is one of the questions that linger in the mind of one reading this case. It was clear from the beginning that Cobalt car model was having ignition problem that could turn off the engine making airbags fail to deploy. The company had already detected the issue at the assembly line in 2004 (Jensen, C., 2014). Despite this, the company did nothing to rectify the matter. Other occasions I felt like this The case reminds me of Bangladesh sweatshop collapse. Rana Plaza collapsed in 2013leading to more than 1230 people dead and 2500 injured (Motlagh & Saha, 2014). In this instance, I felt sad and offended by the companies that benefited from unethical business practices. The fatalities and injuries would have been avoided if the business had been more concerned about workers welfare. As the CEO of GM, what I you have done differently If I were the GM CEO, I would have acted on the matter based on the first incidence. This is through understanding that business is not only for making money. The business involves corporate social responsibility. While making money in a business is not wrong, the approach used must be ethical (Pohl & Tolhurst, 2010). As the CEO I would have been keener in establishing consumer trust. This involves ensuring that the products offered to the consumers are safe for them. Once a problem that can affect the consumer trust is identified, it must be acted on. I would have addressed this problem during the product development stage. This is due to the fact that this is an issue that was identified on the assembly lines. According to the week three submission, a business is supposed to be responsible for their job. Acting on a problem once identified is an act of responsibility. The management had received a suggestion by the engineers early in 2004 to fix the issue. This was another early opportunity that I would have taken advantage of. As the CEO, I would have put the consumers’ interests before organisation profit. It’s important to note that ethical business can benefit a lot in the long run (Singer, 2013). Despite the fact that fixing the company would have affected the company through lead time and costs, I am sure that the benefits outweigh it. I would have stopped the production and recalled all vehicles that had left the production line. This would have averted the problem that GM faces. How GM can explain what happened Careful analysis of the case leaves no doubt that GM acted with negligence. The company was irresponsible and acted without taking care of their customers. Based on week three submission, “business cannot only focus on the profit but also concentrate on the feeling of the employees, customers and other related people”. GM acted against this statement. The action by GM implies they have to make a full apology. The company crisis is a major threat to its profitability. I would recommend the company to use public relations when making an apology and keep the customers informed. Crisis communication is very vital at this instance. Denying the claim or keeping quiet makes the matter worse. The management has to apologize to the affected families in a sincere manner. They have to admit that it was part of their negligence that led to the fatalities. I would expect the management to explain how their failure of taking initial responsibility led to an escalated crisis. The management has to explain their irresponsibility that started when they noted the first case in the production line. As I analyse the management response, they were facing problems in taking fast action since situation leading to accidents in some cases involved other factors such as speeding. They have to explain this to stakeholders. Making an apology after the explanation is not enough. This would involve committing to a thorough investigation into the matter. This will involve assuring all the stakeholders that the matter will not happen again. Implications for GM for similar situations GM has to take a lesson from the implications of this case. The company has to engage in ethical commerce to ensure that they do not endanger their operations. Responsible commerce ensures that business is responsible for all stakeholders. In a similar situation, GM has to put the interests of the consumers first. When the business realizes that there is a failure that can endanger consumers’ life they have to act on it irrespective of cost (Gully, Stainer & Stainer, 2006). The company must learn that they act on the first sign of a problem. I would recommend that GM sets up an elaborate public relations team that can respond to crisis effectively. Effects of differences generated by GM’s practice GM practice differences led to reduced consumer trust. As a customer, I would not trust a firm that operates irresponsibly. Loss of consumer trust has a great impact on business profitability. GM customers felt alienated by the company that failed to protect them from disaster. The company action damaged brand reputation. Business reputation takes years to build but can be damaged by a single event (Zadek, 2007). It’s important to note that brand image is very vital in a business. The company also suffered loss as they had to face legal suits. When and what differed from the expected In the wake of the disaster, it was expected that GM would issue a recall immediately. This never happened and the company took a decade to act. The stakeholders expected the company to act in their interests. The stakeholders did not expect a response that would take a decade leading to loss of lives. Responsible business is part of international business conduct (Sanford, 2011). As a company that had a great reputation, consumers did not expect them to comprise their safety. Utilitarianism My understanding of Utilitarianism is based on maximizing the happiness for the greatest number of people. It’s about morality and focus on the outcome (Frederiksen & Nielsen, 2013). Despite the fact that utilitarianism leads to a maximum benefit to the large number of people, it may lead to inequality in society. Utilitarianism focuses on the outcome but rarely looks at the intentions. Utilitarianism can be used in business practices to ensure positive effects are maximized while negative impacts are minimized. Application of Utilitarianism to case study When applying utilitarianism in this case, cost-benefit analysis has to be conducted (Mill, 2010). A business is supposed to carry out analysis on how an action will cost them and the benefit it will lead to. The results must be favourable to everyone. In this case, GM should have carried out analysis to determine the cost and benefits. The company did not analyse their decision when they refused to act on engineers’ request. The company engineers had requested for the company to fix the issue a piece of advice that was rejected by the management. This request would have brought the greatest happiness to the most people (Zadek, 2006). Instead, the company made a decision to maximize the shareholders wealth. This is through avoiding fixing the issue due to costs and required lead time. In this case, it seems that the business failed to take account of all relevant factors when making a decision. Based on utilitarianism, a decision cannot be made without looking at all factors, risks and costs that can jeopardise success. The business is supposed to look at both positive and negative impacts that the decision would have on everybody (Mukerji, 2013). This would have helped GM to come up with a decision that was unbiased by treating all involved as equal. The cost benefits analysis of the case shows abuse of utilitarianism principles. The company was well aware of the flaws but continued to sell the cars without carrying out safety modifications. The outcome is pain and suffering for the victims and loss to the business. There was a lack of moral duty by the company management which focused only on profits (De George, 2011). The company took used cost-benefit analysis to benefit them while ignoring ethical principles that led to abuse of utilitarianism. The case shows how the company ignored the application of ethics in favour of profits. The loss of human life through company irresponsibility cannot be justified by the company actions (Bertland, 2009). GM decision not to rectify fault is a denial of users’ right to life and safety. The case also shows the weakness of utilitarianism. This is through the use of ends to justify means which are an aspect of utilitarianism. The business focused on the outcome that was high profits without considering the pain they would cause in the process. Using utilitarianism, evaluation of good and bad outcomes can help a business to be more responsible (Gustafson, 2013). This can only happen if true costs and benefited are accurately determined. The costs must also respect human value before making any decision. Conclusion Responsible commerce implies that business must be conducted in a manner that it’s responsible for all stakeholders. The business must ensure that they do not carry out practices that endanger the life of workers or customers. In the case of GM, it is evident that the business was irresponsible. The business acted for profit without considering the outcome. The company failed to carry out an effective cost-benefit analysis. Based on utilitarianism, the business has to act in a manner that brings happiness to the largest group. References Bertland, A.: 2009, “Virtue Ethics in Business and the Capabilities Approach”, Journal of Business Ethics, Vol.84, no. 2, p.25-32. De George, R. T. 2011, Business ethics, Pearson Education India. Frederiksen, C. S., & Nielsen, M. E. J. 2013, “Utilitarianism and CSR,” In Encyclopedia of corporate social responsibility (pp. 2643-2649). Springer Berlin Heidelberg. Frederick, R. 2008, A companion to business ethics, John Wiley & Sons. Gully, A., Stainer, L., & Stainer, A. 2006, “Responsible business decisions: an over‐arching framework,” Journal of Public Affairs, Vol.6, no.4, p.185-196. Gustafson, A. 2013, “In defense of a utilitarian business ethic,” Business and Society Review, Vol.118, no.3, p.325-360. Jensen, C. 2014, In General Motors Recalls, Inaction and Trail of Fatal Crashes, New York Times, Retrieved 19th April 2015 from, http://www.nytimes.com/2014/03/03/business/in- general-motors-recalls-inaction-and-trail-of-fatal-crashes.html?_r=0 Karna, J. Hansen, E. Juslin, H. 2003, “Social responsibility in environment marketing planning”, European Journal of Marketing, Vol. 37, No. 3, p.848-871. Mill, J. S. 2010, Utilitarianism, Broadview Press. Motlagh, J., & Saha, A. 2014, “The Ghosts of Rana Plaza: In Bangladesh, one year after the worst accident in the history of the garment industry, recovery remains a fragile process, justice seems elusive, and reform has a long way to go,” Virginia quarterly review, Vol.90, no.2, p.44-89. Mukerji, N. 2013, “Utilitarianism,” In Handbook of the Philosophical Foundations of Business Ethics (pp. 297-312). Springer Netherlands. Pohl, M., & Tolhurst, N. 2010, Responsible business: how to manage a CSR strategy successfully, John Wiley & Sons. Sanford, C. 2011, The responsible business: reimagining sustainability and success, John Wiley & Sons. Singer, A. E. 2013, “Teaching ethics cases: a pragmatic approach,” Business Ethics: A European Review, Vol.22, no.1, p.16-31. Zadek, S. 2007, “ The path to corporate responsibility,” In Corporate ethics and corporate governance (pp. 159-172). Springer Berlin Heidelberg. Zadek, S. 2006, Responsible competitiveness: Reshaping global markets through responsible business practices. Corporate Governance: The international journal of business in society, Vol.6, no.4, p.334-348. Read More