Student Motor Company Analysis - Essay Example

motor company case analysis 05 December Basically, business ethics refers to the values, principles and standards that operate within business which try to distinguish between morally good and bad actions (Rossouw, 2004). Ethics mainly derive from the organization’s values which should not be compromised for financial gain. However, many people are often tempted to fore go ethics for the love of money, a scenario commonly known as ethical dilemma. Ethical dilemma refers to a situation that often involves complex and conflicting principles of ethical behavior because no clear guideline is available on how to act and respond to a specific problem (Kitchener, 1984 as cited in Ahmad, Ansari, & Aafaqi, 2005, p. 83). Thus, the main problem in the case is that the Zinger model project was rushed and it did not take into consideration factors related to quality and safety of the targeted consumers. The ethical dilemma in the case is that the crash test conducted by the engineers indicated that the fuel tank could be punctured causing fuel leakages which in turn could ignite and engulf the car in flames. The other issue is that the Zinger does not meet the emission standards. However, the company went on with production of the Zinger even after the pre-tests have indicated otherwise. The major ethical dilemma is that the costs of design improvement far outweigh the social benefits likely to be achieved. As fate would have it, a driver and an occupant, a thirteen year old passenger were injured when they were travelling in a six months old Zinger from the problem of punctured gasoline tank. This problem is not new to Student Motor Company at all since the crash tests that were conducted indicated that the Zinger was poorly designed since it could catch fire easily once the fuel tank has been punctured. There are many stakeholders in this case and these have an interest or are impacted by the operations of the organization. All the members of the Student Motor Company ranging from junior employees to senior management are stakeholders. The shareholders are also stakeholders of the company as well as the targeted customers of the new car. Ordinary people are also stakeholders since they are impacted by the operations of the organization and they may also unwittingly be involved in accidents as a result of the defective Zinger offered by the company. The government together with the department responsible for transport are also major stakeholders. The company does not have an ethical obligation to sell a product that can cause death of people but instead should try to avoid selling it. Essentially, the company should strive to act in the best interests of all the people in the environment in which it is operating and should avoid compromising its ethics for financial gain. This is likely to discredit the company in the long run. 2. The two ethical alternatives that can be taken by the company to solve the issue include being truthful or simply ignore the situation. If the responsible authorities choose the path of truthfulness, they will realise that they are obliged to serve the public in a satisfactory way. As such, they would be forced to recall the defective vehicles for the sake of the benefit of the members of the public. Consequently, this course of action will help the company to gain credibility as well as trust of the members of the public. This can in turn improve the long term viability of the company. The other ethical alternative that can be taken by the company is to simply ignore the problem as if it does not exist. The company will benefit financially since it will continue to generate revenue from the sales of the Zinger. However, this course of action is likely to create a bad image of the company since the targeted consumers can end up losing trust in it by virtue of selling defective products that can pose a danger to their lives. The first economic alternative that can be implemented to resolve the dilemma facing the company is to recall all the defective vehicles destined for sale in different markets. The company will incur huge losses since the process of recalling these vehicles itself is expensive. This alternative also means that the company will not be able to generate any revenue from the sales of the Zinger model. Economically, the company will record financial losses but this course of action will also help it to gain the trust of the targeted audiences by virtue of being honest. The other alternative action that can be implemented is to continue operations and selling the Zinger to the customers. The company will not suffer any form of economic loss but the likely danger is that once the consumers discover the issue, they are likely to lose trust in the company. This can lead to a decline of sales in the operations of the company which would be a negative development. Corporate ethics have become hot topics for almost every business and very few firms can ignore them (Kotler & Armstrong, 2010). Enlightened managers ought to act in an ethical way. Thus, in this case, the managers ought to do the right thing that will benefit the majority of the people as well as the company in the long run. The correct management decision in this particular case is for them to recall all the defective vehicles so that their sales are halted at the same time. This course of action is very important as a result of the fact that there would be no more accidents caused by the same problem. Since the defect on the Zinger is known, it can be rectified then the vehicles are returned to the market for sale. The magnitude of loss would not be very high. The safety of the targeted people would be significantly improved. The managers should be exemplary and they should also take into consideration the interests of the targeted people not focus on financial gain alone. The stakeholder approach is essential since it helps the company to forge mutual relations with the stakeholders for the betterment of the performance of the company as a whole. Halting the manufacture of the Zinger model is also a very effective alternative since this entails that the company would not incur losses on manufacturing something that would not generate any revenue for the company. It is better for the managers to do the right thing before it threatens the whole company with closure. The other issue is that the management would avoid creating conflicts with the responsible authorities who oversee the operations of the automobile industry. Taking corrective measures by the management will help the company to stay afloat instead of risking the cancellation of its operating licence for failure of upholding the expected standards. This stakeholder approach is oriented towards satisfying the need s of the stakeholders. There are also many benefits to the company of doing the right thing. 3. In moving forward, it would be imperative to use feedback in order to ensure that the corrective action meets the new standards established. In this case, the new standards set are concerned with rectifying the problems associated with fuel tanks of the Zinger. In order to solve the problem, all the vehicles have to be recalled and the tanks ought to be fixed. It is imperative for the management to use the strategy of feedback from both the employees as well as the targeted consumers. Feedback from the employees is very important because it helps the management to establish if they are in a position to achieve their desired goals of fixing the problem identified. Through the use of feedback, the employees can also understand quickly what would be expected of them. Sharing of ideas can also be enhanced if the management uses feedback to ensure that the right thing is be done by all stakeholders involved. It is also essential to get feedback from the consumers about their perceptions towards the Zinger. Indeed, the consumers are the end uses of the Zinger therefore their input should be seriously taken into consideration in as far as the need to meet the newly set standards is concerned. Essentially, the company is primarily concerned with fulfilling the needs of the consumers hence the need to take their ideas into account when manufacturing the vehicles for sale. The consumers also know what they want and their ideas can help the marketers of the company to design products that will fulfil their needs. The marketers can also keep pace with the changes taking place in the environment in which the organization operates if they listen to the feedback from their valued consumers. The other reason why feedback is a good strategy is that the organization is likely to be responsive to the demands of the stakeholders and this can help to create loyalty among them. This in turn improves the viability of the organization in the long run in its operations. . References Ahmad, N.H., Ansari, M.A. & Aafaqi, R. (2005). “ Ethical Reasoning: The Impact Of Ethical Dilemma, Egoism And Belief In Just World.” Asian Academy of Management Journal, Vol. 10, No. 2, 81–101, July 2005 Kotler, P. & Armstrong, G. (2010). Principles of marketing. CT: Pearson. Rossouw D. (2004). Business Ethics: 3rd Edition. Oxford. Cape Town: Oxford University Press. Read More