Ethical Course of Action - Essay Example

?Running head: Ethical essays Ethical essay Insert . Insert Grade Insert May 6, Ethical Essay Introduction The managersof various business organizations are often faced with decision-making problems that are not easy to solve. These ethical dilemmas are commonplace in business operations and a proper understanding of ethics as it applies in business will help the managers to arrive at some appropriate solution. Consider the scenario where a manufacturer of children’s clothes produces products with a chemical for protection against flames. The textile materials treated by these chemicals have been banned in the markets in UK and US and so the organization resorts to selling its stock to the developing markets where there is no such legislation. The ethical dilemma in this problem The management of the organization had to make a decision between certain courses of action. There was an option of disposing the products that have been considered not fit for use and manufacture those that are required in the US and UK markets. There is also an option of looking for markets for the products in other regions that have no such regulations. The decision-making in the above case is bound by certain significant constraints. The initial problem that had ethical implications here is that the organization had already produced stock that was treated with carcinogenic agent. The organization did not want to run at a loss by disposing these products. The operations of the organization are also governed by the local, regional, and international regulations and a ban on such products in some countries will apply to this organization. Besides, there is also a need to consider the adverse effects of the products that led to its ban in these developed markets and whether it is ethical to introduce into the underdeveloped markets faulty products that have been rejected in the developed markets. Ethical course of action The earlier ethical views in business operations were that the businesses were to serve the interest of the society in which they were established. They were supposed to provide means of achieving the development objectives in the society. These views were later challenged in the 1970s and1980s by the likes of Milton Friedman who argued that the main aim of the organizations is to maximize the profits of the shareholders (Kaptein, 1998, p.22). It was then regarded unethical for a business organization to involve in the well-being of the society. In 1984, Edward Freeman proposed the Stakeholder theory that the objective of business is not only to maximize the shareholders’ profits but also to serve the interests of all the stakeholders of the organization (Crane & Matten, 2007, p.57). Stakeholders include all those parties influencing or affected by the decisions and operations of the organization and so the society is one such stakeholder. In solving such ethical dilemmas, we need to refer to the ethical theories that had been developed in moral philosophies like virtue theory (Aristotle), utilitarianism (Bentham), Immanuel Kant’s Universal law, and the Religious teachings among the other theories. The utilitarian approach will consider the consequences that a given decision will have on all the stakeholders of the organization including the shareholders (Petrick & Quinn, 1997, p.48). The products have been found to be contaminated with agents causing cancer. Selling these products to the consumers in the developing market is equivalent to exposing the consumers to cancerous agents. The overall costs to be incurred in managing the resulting cancer are unpredictably high and will be a threat to the economy. The developing markets may also not afford the same prices forcing the organization to lower its product prices thereby reducing the profits. Besides, a long-term effect will also be seen in its reputation in the emerging market should it be later known that the products were not fit. The organization will soon lose its position even in the emerging markets. Thus, the decision to proceed to the developing market would definitely bring more harm than good to the stakeholders of the organization. The Universal law and the religious teachings have the same implication in this issue. The theories have a common teaching that one should do unto others what he also expect others to do to them, and what he could accept as a universal law (Frederick, 2002, p.4). Globalization has been seen to be a key concept in business ethics and organizations should strive to meet international standards (Crane & Matten, 2007, p.14). The business organization should consider if it would accept faulty services from other organizations simply because there are no restrictions on such services. The virtue theory asserts that one should take pride in his actions. The individual’s acts should demonstrate virtues like honesty and openness that are essential in modern business (Carmichael, 1995, p.12). One cannot have pride in an act that oppresses the others in one way or the other. Altruists suggest ethical behaviors as those considering the well-being of others. Thus, selling these products to the poor consumers shows lack of transparency to the customers. As has been stated in the stakeholder theory, a business should be of service to the larger community. There is need to incorporate the interest of the society in the decision. The costs of production are not born by the company; they are born by the society. The ethical course of action is then to dispose off these products and manufacture products that are fit for use and can be sold in any international market. Barriers to ethical course of action and ways of overcoming the barriers It is important to note that the ethical codes of conduct required of individuals to coexist in a society apply to business operations as well. This is because business involves interaction between individuals (Chryssides & Kaler, 1993, p.37). The business organization in this sense is considered as a single entity and its operations and organizational values are judged according to the moral standards in the society. Plato had postulated a theory that explains the happiness of man (Tirosh-Samuelson, 2003, p.12). He suggested that the human soul had different parts namely: reason and Judgement; spirit, courage and pride; and the desires of the soul. All these aspects work together to contribute to happiness of an individual. He also noted that fulfilling these requirements for happiness would call for ethical behavior in the individual. The same scenario applies in business. The customers of a given business organization will consider many aspect of the organization in ethical terms (Carmichael, 1995, p.12). The various organizations have organizational cultures that uphold their identity and pride. The organization management should have standard argument supporting whichever decisions they have to make. In the event that the stakeholders are not convinced by these steps, there may be a need for changing the overall structure of the organization (Trevino & Nelson, 2010, p.399). There are also organizational goals that are to be met corresponding to the human desires. The organizations that will achieve these are those that observe ethical standards in business. Involvement in community activities symbolizes an ethical corporate culture of an organization (Goodpaster, 2007, p.108). The concept that was developed by Friedman on the Stockholder theory is not fully applicable in the current market. Even though profit maximization is one of the goals of a given organization, there are other goals that the organization should strive to achieve and the best course of action is that which attempts to meet the maximum goals (Machan & Chesher, 2002, p.124). In attempting to adopt the above course of action, the management of the organization will meet some barriers. In many instances, the leaders acknowledge the need to incorporate ethical programs in their decisions but fail to determine the objectives of the programs (Ferrell et al, 2009, p.225). The ethical implications are often perceived differently and not every individual involved in the decision making process will have a common understanding of a given concept. The multicultural environment in the international market is also associated with different ethical challenges. What is perceived as ethical in one culture may be perceived differently in the next culture (Trevino & Nelson, 2010, p.399; Jackson, 2001, p.16). The management of such conflicting ethical issues consists in developing organizational cultures that are universal to all other cultures. This has been seen to be behind the success of Dow Chemical Co. The company has developed values based on ethical behaviors (Liveries, 2011, p.1). Some egocentric shareholders in the organization would suggest a violation of the legal provision by the UK and US governments concerning their products. However, such an act is not only unethical but also has other negative implications. Such unethical leadership was seen to have adverse effect on the operations at Enron (Thompson et al, 2010, p.108). The organization may be subjected to lawsuits that impose heavy losses. The abiding by the legal provisions by not getting into these markets is thus ethical. The shareholders of the organization might also consider it inappropriate, as it will lead to the loss of products already in stock. In this regard, the management of the organization should point out to the long-term consequences of the alternative course of action on the operations of the organization. The economic benefit of a given action in the long run should be the center of focus during such decision-making processes. One of the most valued assets of any business organization is the customers. The current market is very competitive with several companies investing on similar products. Observing ethical standards will ensure good brand image and reputation (Henn, 2009, p.11). If an organization loses customers due to poor quality of products developed, the competitors find humble opportunity for capturing the customers and regaining this previous market position is never easy. The company will then be forced to develop new marketing strategies like developing new brands, brand positioning through advertisements, or lowering the quality of their products. The organization may be forced to quit the business completely and set up new business projects. All these actions will cost more than what could be lost in disposing the faulty products. Performing an effective Stakeholder Analysis is one way of making proper decisions in an environment surrounded by such ethical dilemmas (Weiss, 2008, p.56). The influence that the stakeholders have on business operations and their importance need to be considered in the decision making process. There is need to consider the powers that individual stakeholders have in influencing the activities of the organization. It is important to consider the effects that the activities of the organization will have on the problems, needs, and interests of the stakeholders. The contribution of the society is very essential in the future profitability of a given organization as the consumers have an increasing power on businesses (Thompson et al, 2010 p.109). The concept of Corporate Social Responsibility has similar ethical implications and need to be adopted by any organization that is to operate in the contemporary market characterized by stiff competition. Serving the interest of the stakeholders helps building good reputation and eliminating elements of distrust that might be created between the management of organization and the stakeholders. References Carmichael, S., 1995. Business ethics: the new bottom line. London: Demos Chryssides, G. and Kaler J., 1993. . An Introduction to Business Ethics. Second ed. London: Cengage Learning EMEA Crane, A. and Matten, D., (2007). Business Ethics: managing corporate citizenship and sustainability in the age of globalization. Second edition. Oxford: Oxford University Press. Ferrell, O. et al. 2009. Business Ethics: Ethical Decision Making and Cases. Seventh edition. South-Western: Cengage Learning Frederick, R., 2002. A Companion to Business Ethics. Malden: Blackwell Publishing Ltd Goodpaster, K. E., (2007). Conscience and Corporate Culture. Malden: Blackwell Publishing. Henn, S., 2009. Business Ethics: A Case Study Approach. New Jersey: John Wiley and Sons Jackson, T., 2001. Cultural values and management ethics: A 10-nation study. Human Relations; 54; 1267-1302 http://www.nihul.biu.ac.il/_Uploads/dbsAttachedFiles/1%2828%29.pdf Kaptein, M., 1998. Ethics management: auditing and developing the ethical content of organizations. Dordrecht: Kluwer Academic Publishers Liveris, A., 2011. Ethics as a Business strategy. Vital Speeches of the Day, 77(1), 35-39. (Online). Available from: http://web.ebscohost.com/ehost/pdfviewer/pdfviewer?vid=5&hid=15&sid=4c6e31fb-0422-4f93-b4a8-dd108b06c9d6%40sessionmgr12 (Accessed May 6, 2011). Machan, T and Chesher, J., 2002. A primer on business ethics. Lanham: Rowman & Littlefield Publishers Petrick, J and Quinn, J., 1997. Management ethics: integrity at work. Newbury Park: SAGE Publishers. Thompson, K. et al. 2010. Implementing ethical leadership: Current challenges and solutions. Insights to a Changing World Journal, 4, 107-130. (Online). Available from: http://web.ebscohost.com/ehost/pdfviewer/pdfviewer?vid=5&hid=15&sid=4c6e31fb-0422-4f93-b4a8-dd108b06c9d6%40sessionmgr12 (Accessed May 6, 2011). Tirosh-Samuelson, H., 2003. Happiness in premodern Judaism: virtue, knowledge, and well-being. NY: Hebrew Union College Press Trevino, L and Nelson, K., 2010. Managing Business Ethics. San Francisco: John Wiley and Sons. Weiss, J. 2008. Business Ethics: A Stakeholder and Issues Management Approach. 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