Type of paper: Essay

Topic: Business, Company, Ethics, Organization, Cost, Environment, Responsibility, Theory

Pages: 6

Words: 1650

Published: 2020/12/31

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Business Law and Ethics

Business Law and Ethics

Question 1

According to Joseph Johnson’s point of view, the stakeholder theory is not workable on a practical basis, but theoretically. In his article, the author focuses on the aspect of fiduciary, which points to the moral responsibility of a company to its stockholders or shareholders. Fiduciary argues from the perspective that the owners of any organization receive first consideration and the organization must ensure that it holds the greatest interest on only the shareholders. The principle is an ethical application in the United States, and all companies should act based on fiduciary theory (Johnston, 2005).
Johnson believes that the theory is not applicable because not all stakeholders can be pleased as the company aims at making profits. For the making of numerous profits, an organization requires to be in good terms with its investors and shareholders since they are the major source of capital. The author believes that without the shareholders, the organization will fail and through lack of sufficient funding. Therefore, adherence to the stakeholder theory may only result in failure of the organization since the need to please all involved stakeholders will amount to enterprise failure (Johnston, 2005).

Personal Perspective

I agree with Johnson’s shareholder theory unlike the perception of Edward Freeman, who believes in the need for pleasing all the stakeholders. In the quest for satisfying all the stakeholders in an organization, I believe it will fail since aspects such as profits are the major concern for the organization. For example, pleasing employees may turn out dangerous, and the organization would lose much of its control over them and thus minimal profits.

Discussion

Milton Friedman would fully support Johnson’s idea since he argued against corporate social responsibility and the focus of profit generation alone. Edward Freeman would obviously disagree with the theory since the suggestion is contrary to his way of belief. He believes in corporate social responsibility and adherence to wants of all the stakeholders (Hörisch, Freeman & Schaltegger, 2014).

Corporate social responsibility and stakeholder theory clash with the fiduciary duties. The two have less concern for profits, but major on bettering their relations with other organizations. On the other hand, the principle of fiduciary focuses on making profits and bettering their relation with the shareholders who are responsible for raising capital (Johnston, 2005).

Question 2

Personal Opinion
I agree with Kelman's view that the cost-benefits analysis may lead to flawed ethical results at times and is not sustainable for all activities. In his critique, Kelman points out the concerns of a cost-benefit analysis, which are ensuring that in all activities, the benefits should outweigh the costs, rendering the activity viable. Any activity whose costs outweigh the benefits should not be carried out since the activity is not productive (Butters, Calfee & Ippolito, 2013).

Suitability

However, Kelman’s approach is quite different, and his focus is on the implication of the overall activity. The cost-benefits analysis is not an appropriate tool for testing all activities because some aim at enacting positive implications on the environment and the people. Some activities may have more costs that benefits though still affect the environment positively and be of many benefits to the people.

Other concepts

Kelman gives an example of environmental, health, and safety-related activities. The activities are very expensive to start, especially for governments, yet having minimal dollar valued benefits. The application of the cost-benefits analysis on such projects is unethical, and the results will be negative, hindering its conduction. The tool is not suitable for such activities since it focuses on dollar values of activities, and not the associated positive outcomes (Butters, Calfee & Ippolito, 2013).
As seen, the cost-benefits analysis is not an effective tool for analyzing all activities. The test is not suitable for activities aimed at helping the people, and not the generation of profits. An effective tool is one that puts into consideration the ethical impacts, social responsibility and environmental benefits of the activity. Any activity aimed at helping the public or bettering the environmental state is disqualified by the cost-benefits analysis, despite its positive implications. It, therefore, proves that the test is insufficient and is not sustainable.

Business Application

However, for business purposes, the cost-benefits analysis is the most effective and aims at ensuring that the business venture is profitable. It does not put into account the ethical implications or societal benefits, which are also minor concerns for the business. The need to make profits results to the effectiveness of the cost-benefits analysis as test tool.

Question 3

In Ford Pinto’s case, there is a variety of considerations made, based on three factors, namely economic outcomes, ethical duties, and legal requirements. In terms of the economic outcomes, adoption of the better design would have affected the organization’s profits since it was more expensive compared to the previous one. The adoption of the design would have had a negative influence on the economic state of the company, and minimize its sales and thus profits (Gioia, 2014).
Legal requirements do not have dictation on the company's design since it used the cost-benefits analysis to calculate the viability of the design and turned out negative. However, in terms of ethical duties, the company should have put the design in place to ensure that it cares about its customers and practices corporate social responsibility. The aim of maximizing profits should not compromise its safety, and the organization should ensure that all ethical aspects are met. Dependence on the cost-benefit analysis is unethical in such instances (Halbert & Ingulli, 2011).
The moral problem, in this case, is the company's decision to adopt a faulty design for profit maximization. The company should have better increased the prices of the vehicle, make the same profits, rather than sell bad cars to the public. In this way, all involved parties are considered, and the move betters the situation for all of them. Despite the higher cost paid by the customers, the cars will be better and safer for use. The company makes it profits and serves the society.

Question 4

Conflicts and Pressures
In the case, there is a variety of conflicts and pressures resulting from the dilemmatic situation in the organization. Among the conflicts is the conflict of perception, style, personal values, policies, and goals. Pressures include working against one’s personal ideologies, conflicting conditions and having a negative impact on the environment.
I believe in the betterment of the society and constant improvement of services to not only better profits, but also improving the lives of other people. In this case, Multi-LimbTech, International, Inc activities are against my beliefs and ideologies. The activity that the company involves in is against my beliefs, and I think that it is morally wrong and unethical.
There are many pressures in the workplace, and I have to abide by unethical practices set by the organization. The sale of poor quality equipment to the unknowing public is unethical and goes against all the moral responsibilities of the organization. The company is exploiting the fact that governments do not follow up on their production, and thus making sales of poor quality equipment. The limbs sold out might are quite ineffective, whereas the company is making numerous profits from its sales. It thus proves that the activities being carried out are not ethical, and the company should reform its policy to better services to its customers.

Questions

There are varieties of questions that I should ask, based on the unethical policy of the company. They include
Why the company is indulging in unethical behavior?
What the corporate social responsibility of the company is?
What the long-term goals of the company are?
Why the company cannot correct its products and better its service to the patients?
How the company has helped the public by selling them poor quality products?
The questions aim at bettering the service through questioning the company’s behavior and role in the society.
Stakeholder Interests
There is a variety of stakeholder interests, based on the relevant stakeholder. For example, customers want the best service and products to help them cope with their physical problems and improve their lifestyles. The interest of the shareholders is majorly making profits, but also improving lives of the handicapped. The employees also believe in improving lives, though the company’s interests focus on generating profits. The company should also focus on bettering its products to service the handicapped better.

Legality and Ethics

The practice may be legal, but it is highly unethical and goes against the values of the company. It does not play its corporate responsibility role and exploits the lack of government intervention to maximize its profits.

Profit Making and CSR

The company can, however, do well and still make numerous profits. Through product betterment, it will still continue making its profits, and at the same time maximize its role in helping better the society.

Variance of Ethics

Ethical norms vary from culture, but most of them adhere to bettering human lives. Some cultures have fewer ethics, unlike others where there is a major focus on the betterment of human lives and the environment.

References

Carroll, A., & Buchholtz, A. (2014). Business and Society: Ethics, Sustainability, and Stakeholder Management. New York: Cengage Learning.
Johnston, J. F. (2005). Natural law and the fiduciary duties of business managers. Business and Religion: A Clash of Civilizations, 279, 289-90.
Hörisch, J., Freeman, R. E., & Schaltegger, S. (2014). Applying Stakeholder Theory in Sustainability Management Links, Similarities, Dissimilarities, and a Conceptual Framework. Organization & Environment, 27(4), 328-346.
Butters, G., Calfee, J., & Ippolito, P. (2013). Reply to Steven Kelman. Readings in Risk, 5(2), 136.
Gioia, D. A. (2014). Ford Pinto Recall. Global Supply Chain Quality Management: Product Recalls and Their Impact, 107.
Halbert, T., & Ingulli, E. (2011). Law and ethics in the business environment. Cengage Learning.

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