Business And Society Application Of Ethical Theories Commerce Essay

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In day-to-day life, business situations present decision-making opportunities that may affect peoples' lives either negatively or positively. Working for companies often require adherence to ethical models in making choices and decisions. There are two main ethical theories that try to elucidate on decision making in business. This paper is going to use the utilitarianism theory, and the ethical theory to elucidate on the decisions that can be made in a case study involving a business firm and an employee.

Crane and Matten (2007, p. 102) write that consequentialism theory is a model that is used to judge the rightness or wrongness of decisions and actions basing on its consequences. Under the consequentialism theory, the most prominent example is utilitarianism, which asserts that an action is good if it produces the best results for the greatest number of people (Beauchamp, Bowie, & Arnold, 2009, p. 95).

This essay will try to look into the options that the stakeholders in the case have in handling the situation to come up with solutions that will leave the greatest number of people happy. It will apply the ethical theories, utilitarianism, and virtue ethics theory to the case in elucidating the choice of action for each of the stakeholders. Utilitarianism theory asserts that a decision is morally right if the sum of the people to benefit from it is more than those who are likely to be saddened by the choice. It relies on the principle of the greatest happiness in providing judgment. The notion of utility is the key basis of judgment. The dilemma that the firm faces is whether the decision is ethical or unethical. Sam is the member of the firm who is mostly affected by the situation because he owes allegiance to the firm, and has to be sincere to his sister, and other children and mothers elsewhere.

Identification of Stakeholders and ethical issues in the case; objectives and responsibilities

There are various stakeholders in the case who have to make decisions, or whom the decisions made by a few will affect either positively or negatively. Basing on the ethical theories, one can summarize that short-term negative effects to the consumer side guarantees short term and long term benefits for the company side due to the choice of action that the firm stakeholders are likely to make. Each stakeholder faces different ethical issues in the case and has different objectives and responsibilities. The objective and responsibilities will be unethical if they favor a small number of people, and morally ethical if they favor the largest number of stakeholders according to the utilitarianism theory of ethics. The major stakeholders in the case are Sam, the executives, the firm, Michael, Baby Mobile Shareholders, Project Team, Parents, Babies/Users, and Suppliers.

Sam is one of the main stakeholders who face the most challenging ethical issue. He owes allegiance to the firm, but he is morally conscious that the decision that the firm makes is not right.

Michael is another stakeholder who has an ethical dilemma. He has the responsibility of ensuring that the firm makes a profit with the least expenses. Additionally, he the mission of ensuring that the organization achieves its goals, but will this happen at the expense of innocent consumers; hence he faces this ethical issue.

Baby mobile shareholders are also stakeholders who have to have ethical considerations in coming to the decisions to execute the product selling. Therefore, this presents an ethical situation.

Employees are parents, or would be parents who have the duty of protecting the consumers by promoting the sale of high quality products by the firm. Incidentally, they are duty bound to protect the interests of the firm because by the end of the day, they would need salary.

The company executives also face ethical issues, for instance, they have to promote the interest of the firm and make profits. However, they have to uphold the image of the firm by presenting high quality products to the customers.

The suppliers have an ethical dilemma in that they have to retain a cordial relationship with the firm by providing the best products on time. They also aim at making profits.

The firm faces several ethical issues, including maintaining its image to the consumers, sustaining its market permanently, satisfying its customers, and making a profit.

STAKEHOLDER

OBJECTIVE

RESPONSIBILITY

Sam

Making profit,

achieving organization's goals, good reputation for the firm, 

Meet deadline, profit,

upholding the reputation, promote consumer safety , innovating the design,

meeting the deadline within design constraints

Michael

making profit for the firm,

achieving organization's goals, maintaining the reputation of the firm,

manage time and design frame

be clear to team about expectations,

communication to shareholders, meeting deadline, making profit,

upholding the company reputation,

safety of consumers , promotion of innovation

Baby mobile shareholders

Getting dividends,

return on investment,

sharing price,

profitability of the firm, upholding the reputation for the firm

Investing in the firm and ensuring profitability

Project team

making profit,

achieving organization's goals, Upholding the firm reputation, meeting the deadline,

minimizing costs

Meeting the deadline,

Making profit,

Upholding the reputation, ensuring the safety of the consumers,

innovation,

and communicating with other departments

Other employees

Securing loans,

maintaining good reputation of the firm 

Delivering of good work/ quality,

Communication with other employees and departments, working together to achieve the companies goals and objectives

The firm

Sustainability in the market, making profit,

Upholding reputation

Environmental awareness, customer satisfaction and safety

The executives

satisfying shareholders wants and needs,

making profit,

upholding good reputation

Safety of customers,

payment to employees,

paying shareholders

Parents

Safety of their children, Quality products for their children, 

take care of children

Babies/users

safety from harm

Suppliers

Making profit,

Maintaining good relationship with the firm

Timely delivery of goods,

good quality,

high safety standards, 

Sam is at the helm of making a decision that could profit the company and harm the consumers or harm the company and save the consumer. The problem is the timing of the decision. This is because the company has limited time to impress the shareholders at the expense of the consumer. The executives have the responsibility of customer safety and, therefore, should not ignore their responsibility as they try to manage their objective. Crane and Matten (2007, p. 104) argue that there is a symbiotic relation connecting ethics and business, whereby ethics naturally materialize from a profit-oriented business. However, Crane and Matten (2007, p. 105) point out that there are two approaches to the argument, a weak and strong argument. The weak argument illustrates that good business is often a result of good ethics. This means that moral and sound business practices are a guarantee to good business or profit as a result of reduced product liability lawsuits. Sam should consider "the long-term benefits of a business are gained by seeking a trusting affiliation with the consumers" (Soares, 2008, p. 554).

The strong version of profit motive (Soares, 2008, 545) approach argues, in a competitive and free market, for example, a capitalist market in this case, the profit motive brings about a morally appropriate business environment. The company initial object of funding the research and design team was to meet customer demands. If the company can meet the customer demands; including safety, then the business can survive; however, if the business does not heed to the customer demand, it will surely fail. Sam should consider which place he wants to be in the future. The company he works for would be in the midst of future failure in case he opts for silence. However, if Sam speaks out, the safety of the consumer will be guaranteed, and his career will be in jeopardy.

Sam decision to act as a whistle blower would affect all the stakeholder of the issue in different ways. Whichever decision Sam makes he would act as a hero. For example, if he goes silent, he would be a hero for the company, and if he speaks out, he would end up as a hero for the consumer.

Impact of protagonist

STAKEHOLDER

If he takes action

If he does not take action

Sam

Will not meet the deadline,

The company will maintain its reputation.

Will become a hero to everyone except the company they work for.

Might lose his job

Get special recognition from executives,

Stand at career execution in the future.

Keeping quiet for Sam is unethical and is punishable by law and professional bodies

He will be self-guilt

Michael

Not achieve organizational goals and profits,

Maintain good reputation, Job loss because he was not able to meet deadline and control Sam.

Get promotion because he was heading the design team and was able to impress the shareholders, he might get recognition through awards, salary increment and promotion.

Project team

Get demotion and kicked out of the design team.

The management would put blame on the research department,

Get recognition and more resources to better their innovation.

The management would be willing to support a team that they can 'trust'

Remuneration

The firm

Lose customer base,

Possible law suit for fake products,

Make losses

Maintain reputation,

make profits.

Safe products for consumers

Will retain good customer base

The executives

Get sued

will lose reputation

Parents

Safety for children guaranteed,

Save money that could be used to handle the risk and enjoy value of their cash.

Get less value for their money,

Expose their kids to risks.

Will lose money on health issues and fake products

Babies/users

Safety guaranteed

Exposed to safety risks

Consequentialism/Utilitarianism Theory

The philosophy in this ethical theory considers the idea that an action or a decision is morally right if it positively affects the greatest number of people. Therefore, this theory implies the principle of the greatest happiness, and emphasizes on the consequences of the action by weighing the good against the bad consequences. In essence, the theory encourages the action that results in the greatest amount of good consequences and discourages the one that results in the least amount of good.

The underlying perspective in this theory is the economic principle of utility, which is probably the ultimate objective in human life. The purpose of man is to maximize their pleasures and minimize the pain at the same time; hence, measuring utility in terms of pain verses pleasure. The suitability of an action being done depends on the pleasure to be derived from the action. This is the basic definition of utilitarianism in detail (Mendola, 2006, p. 2).

For example, the case presents Sam, who has to make a decision basing on the results of the decision by the firm. He has the moral obligation to protect his sister's daughter and other children. He is also duty-bound to protect the interests of the firm, where he is a member of staff. The decency of his decision will base on the number of people who will benefit from his action. If the number of beneficiaries is than the number of more, those affected negatively, then Sam has to proceed to denounce the company decision. If otherwise, then he can keep quiet and let the company sell the product.

Michael also has options that will affect several people either positively or negatively. First, he can decide to deter the executives from proceeding with the marketing plan, or he can decide to take no action and let the executives proceed with the plan. Both ways, the action will benefit some players, and some players will lose. This is where the utilitarianism theory has to apply. He as to weigh the number of those to benefit verses the number of those to lose.

Weight of Benefit and Harm In Regard To Whistle blowing

The stakeholders in the case have various options that will affect others either positively or negatively. First, Sam can decide to take the action of cautioning the company against marketing the product, or he can decide to take no action. If he decides to take action, the benefits will be numerous. First, the public will consider him as ethical and honest; hence he will be branded as a hero. Further, he will save the children from harm due to the defected products, especially his niece. The company will not lose prestige for selling defected products and above all, he will not walk around with guilt conscience. Other benefits that will accrue from Sam taking an action include long-term profits for the firm since it will retain its consumer base and will uphold its image in the public. The employees will retain their integrity for availing quality products to consumers. To the parents, they will keep their children safe from injuries and will save money from buying defective products. The above are some of the benefits that all the stakeholders will attain if Sam takes an action. However, there will be several harms in case he takes the action. These will include the fact that he stands a high chance losing his job as an employee of the firm, the organizational goals will not be attained, and therefore, Michael is likely to lose his job as well. The company and the shareholders will definitely make losses, although this might be short term because the products will not be marketed. Basing on the fact that the employees will not meet the deadline and the shareholders are not likely to get their dividends, the other employees of the company will lose their jobs. The project team will fail to meet the deadline and the company will incur a short-term loss. The suppliers will definitely lose their market and they will make losses.

On the other hand, should Sam decide not to take an action, there will be benefits like retaining his job and helping his Michael and the team to meet the deadline. Michael will be recognized by the company executives as a good team leader, and is likely to get a promotion. Further, the company will make short-term profits and the shareholders will get their satisfaction and dividends. The hard work of the team will attract remuneration and the company will profit from the sale of the products.

There will also be numerous harms should Sam decide not to take action. First, he will live and work with guilt conscience. There will be concerns of safety issues from the consumers and the firm is likely to be sued for that. Due to this, the firm will lose its image and prestige to the public. This will lead to withdrawal of shareholders and loss of consumer base to other companies. The firm will make long-term losses, which will lead to loss of jobs for Michael and employees. The parents will have to incur expenses in the treatment of their children and purchasing of defected mobiles. Finally, the firm and the suppliers will have to face legal suit from parents for availing defective products.

Weighing

Take action: benefit: 22 harm: 11

Does not take action: benefits: 12 harm: 26

These results are indications that there will be more harm if he does not take action and less benefit. More benefits will accrue from him taking an action. This implies that Sam will be justified to take an action against his company.

Elements of Virtue ethics

Griseri and Seppala (2010, p. 54), the virtue theory uses the perspective of looking at a good life as the basis of understanding moral actions, rather than basing on the judgment of right or wrong. Judgment of one's life as good is based on the individual's character by considering the features of their personality. This theory considers the fact that a good personality is what makes an individual's life to be good. The personality aspect introduces the idea of virtue. By virtue, philosophers mean a good moral character that prompts individuals to act in a certain way, for instance, kindness, and politeness, among others. This theory asserts that virtues do not compel people to behave in a certain way, but rather it increases the probability of them behaving in that way. Virtues can be implemented in businesses in the daily lives. In administration and decision-making, virtues are the basic boundaries that distinguish success and failures.

In the case at hand, the decision that Sam takes can be driven by the urge for justice, truthfulness honesty, and generosity to do the right thing by blowing the whistle. The decision is ethically correct, because despite blowing the company secrets, he would be helping majority of the stakeholders. Majority of the stakeholders would benefit from the decision to blow the whistle. The elements in the consumer side would benefit wholly from the decision. This is a non-consequentialist theory at play.

Personal moral qualities that would be relevant in this case include truthfulness, integrity, fairness and courage. Integrity and courage are necessary for Sam to speak the whole truth about the scenario of how the company harms the flourishing and well-being of the consumer. This way, the company will not be honest with the customers for selling poor quality products. Further, it will lack the aspect of fairness and its customers will lose trust in it. Tom should also be courageous enough to stop the marketing of the defective mobiles, although the company will consider him a liability.

Personal reflection

In most cases, working in fraudulent companies may be challenging if one is ethically moral. This is because being moral implies that one represents the public more than they represent the company in most cases. Whistle blowing is "the disclosure of organizational member's (former or current) disclosure of illegal, immoral, or illegitimate practices under the control of their employers to persons or organizations that may be able to effect action" (Koehn, 1999, p. 71-73). In the case of Sam, he would have taken the right path that meets equal and fair activities. The path is not dependent on ethical theories but rather on personal principles and the moral obligation of employees to the company and the clients as well. The employee has the moral obligations to safeguard the company future and to provide the client with their value of money. Business is conducted because of offering the value of money. In the case of Sam, the executives cannot claim that the defect on the infant carrier is a quality issue. This is because the infant carries are subjected to flexibility in use, safety, and convenience. If the quality issue was something like fading of colors, he would have gone silent. However, the quality issue at hand is very critical as it would directly affect and harms the client. Therefore, it is only moral and wise to protect the customer from the harm.

Conclusion

Understanding the ethical theories is one of the essential aspects while dealing with business decision-making processes. As in the above case, utilitarianism theory tries to elucidate the actions taken by individuals in dilemma situations (Mendola, 2006, p. 2), which do not provide positive feedbacks from all directions. It applies the notion that an action is morally right if the greatest numbers of people are positively affected. At the same time, the virtue theory contradicts by asserting that the quality of life of an individual is the basis of judgment of what should be moral and what should be immoral. This theory bases on the notion that a person lives a good life because of the virtues they possess. Examples of virtues include honesty, truthfulness, among others.

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