Business Ethics on Global Enterprises 5th December 2011 Report (Assessment)
This assessment on business ethics in Global Enterprises is designed to identify and understand the best ethical and critical decision making options, consequences and legal provisions on management process (Dienhart, 2000). Effective decisions would be useful for both the company and the working staff and amicable solution of any issues should be of great importance. Business ethics always contributes to either bad or good reputation of a company and this also applies to the Global Enterprise Company.
Several global businesses including some of the major brands that the public normally uses in either way have violated this provision by not thinking rightly on the ethical business concerns and the binding laws. These businesses have been fined several millions for breaking these business ethical laws.
To avoid such consequences, Global Enterprises as focused contractor and manufacturer, should consider the scenarios it is in order to find the best solution that is acceptable to the employees and the Union of Munitions and Armor Workers (UMAW). The Authentic Assessment Project (AAP) in this case analyses the scenarios presented that the GEI is facing.
Identified Scenarios/Ethical Issues
Employees of the company are registered members of the Union of Munitions and Armor Workers (UMAW). It is ethical to make decision that may not damage the reputation and good name of the company. Therefore, the most amicable way to deal with the employees who are under the umbrella of a union should be a sounding reason that befits the action against employees. It is automatic that the employees are enjoying the support of the union.
Often, the union binds the company to fulfill the rights of the employees and that they must be always paid promptly including better working terms and conditions. This is very ethical for the union to act in the interest of its members (Shaw, 1999).
It is not the problem of the employee, but a mistake of the managers who do not follow the provided laws to guide the business operations. In the labor market, unions and labor laws are provided, which must also be respected by the GEI. It is not a question of whether the company abides by the laws, but the effected action.
Manufacturing of land mines and exporting to Afghanistan and Iran is contrary to international law and treaties. There must be consideration of the parties involved in the international treaty. This is because international laws are not simply made by the law makers, but are brought up by legislators and some of them could be lawyers.
These international laws that guide treaties among countries are made by the government legislators. All the parties that the law affects are required to abide as the government overseas the operations. GEI Company had violated the treaty and the business operates and deals with illegal and explosive devices.
The enforcement of these laws is through intergovernmental organizations, which create soft law. Ethical considerations are part of the factors that influence the formation of the international laws. In this regard, there must be a reason that such laws are enacted for the best interest of the population and any danger that might interfere with the international peace process and enhance good business performance. GEI seems not bothered by these possible outcomes.
This is very ironical, no wonder the management have got financial constraints and could not fulfill its fiduciary duties. This could also explain why the company produces substandard products specifically materials used in manufacturing and producing landmines where most are ineffective. However, ineffectiveness could be as a result of poor quality work, which could not be approved by the national government.
As a result, even though they pay highly when sold, the customers who had sensed the problem would hardly buy from them in future, apart from taking legal action against the company for compensation (Parker, 1998). The quality compromise could be difficult to mend because poor business practices and financial constraints disable the company to purchase quality materials for the business. This could be as a result of unethical behavior in the business.
Ethical behavior in a business is a fundamental virtue for all the parties involved. There are both merits and demerits in a business environment.
The advantages includes, getting higher revenues that could be used to settle all financial needs, improved business brand for awareness and recognition, excellent employee recruitments and motivation and lastly more other financial sources from ethical investors (Crane & Matten, 2004).
However, the GEI Company is on the demerits’ side and has continuous financial problems, higher overhead costs and inability to meet the employees’ and customers’ needs.
Another ethical scenario is where GEI Company must comply with the Plant Operations Closing Act (POCA) that demands for a three month notice before the company winds up and relocate which is an effort to evade the heavy demands of financial compensation to the victims of the circumstances through legal battle. The act provides that there must be 60 days notice for closing and GEI tried to avoid this option since this would alert the public and intensify legal prosecutions.
The reason that makes the board of directors avoid this option is that it only favored the company and did not consider the plight of the victims based on fighting for justice. In scrutinizing the GEI Company, the government and the customers were exerting pressure for the business to act ethically.
The pressure was for the business to improve ethical track record. This was experienced through the direct action of consumers. In a related and general term, this action objectively rises because there is considered unethical move by the business, cases where businesses act irresponsibly and where the business practices are unacceptable. All these were reflected in the operation style of the GEI Company.
Other ways that unethical conduct is presented in the company included: manufacturing dangerous explosives that claimed lives, there was deception and trickery when the company faked the bankruptcy case as away not to compensate the respective consumers and victims.
Besides, there was greed, breach of psychological contract, conflict of interest, betrayal of trust, and neglect of duty to care for the people (Fisher & Lovell 2003). All these unethical behaviors are shown in the way of management in GEI Company. Due to these unethical behaviors, there could be no way of being successful in this kind of business.
The best ethical behavior that could help in preventing the problem initially was by avoiding manufacturing of dangerous weapons like land explosives. In this case, the consumer safety would be taken care of and many legal issues on compensating them would be avoided.
Legal and Ethical Issues
From the arguments based on GEI Company, there might be confusion on relating ethics and law. These are two distinct things. It is not always that being lawful is also ethical. This is a mixed concept that must be reflected independently. However, it is realized that many things that are unethical are lawful and some of these issues could be tested when taken to court. For instance, GEI Company found it lawful to file for bankruptcy protection.
They knew that US Bankruptcy Court has powers to relieve them from their contractual obligations. Even though it is unethical to run away from this responsibility, Bankruptcy is lawfully used often by companies burdened by Union demands and other compensation issues (The U.S. Department of Commerce, 2004).
In contrary, some unlawful actions are considered to be ethical. This is because in certain instances there could be a convincing ethical justification for law braking or altering the law. All these are equally challenging issues in the management system of a company (Boatright, 2003).
Exemplifying this, it is ethical financially to make a huge profit in a business, but in some cases, the means of making such amount could be unlawful. This practice was observed when GEI Company was involved in manufacturing of land mines and exporting them to Afghanistan and Iran contrary to the international law and treaties.
It is also unethical behavior in misleading of the consumers to buy products that are faulty or of low quality (Cowton& Crisp, 1998). At the same time, this is also not lawful according to the consumer protection act, which is a law used in regulating sales. This shows that the two concepts, law and ethics are not always equal but just to some extent depending on the situation at hand.
Fiduciary Duties and Manager’s Ethical Responsibilities
The fiduciary duties are legal obligations that the managers have in the best interest of the customers and stakeholders. The manager is entrusted with management and caring of the company in all aspects in order to achieve business objectives and profit. An ethical work place could be created in order to achieve this obligatory work. This can be through appropriate training programs on ethics that is always necessary for the business success of the company.
Managers should consider ethical issues on these grounds: the golden rule, when making ethical decisions consider actions that “you would want others to do for you” (Hinman, 1998). The managers did not consider this when they sacked all the employees without compensation, which was unethical act.
Secondly, the four way test: asking whether the answer is yes based on these questions in relation to the business; has the manager made a truthful decision, are the concerned parties consider it fair? Is it able to build friendship and goodwill and lastly inquiring whether the action could be beneficial to all parties affected by the business move (Beauchamp, Bowie & Arnold, 2008)? All these questions relate to the better ethical management practices.
In analyzing the fact that GEI company considered various options for business relocation. It was unethical to file for bankruptcy protection in the US judicial courts because the employees and other concerned parties were not favored by the move.
It was also not appropriate to relocate the company to Brazil and Colombia because the aspiring employees were going to be rendered jobless. The best idea could be to make agreement with any local company and incorporate its business agenda while maintaining the employees of the company.
This could mean a possible rebranding of the company and changing management policies which are to be ethical in all aspects. Finally, as much as there is main objective of making business profit, the reputation of the company must be maintained in order to sustain its already acquired customers. Quality is of the essence in this case and the management of GEI Company ought not to compromise on this.
Beauchamp, P. Bowie, L. & Arnold, D. (2008). Ethical Theory and Business. New Jersey: Prentice Hall publishers.
Boatright, J. (2003). Ethics and the Conduct of Business, (4th Ed.). New Jersey, NJ: Prentice Hall.
Cowton, C. & Crisp, C. (1998). Business Ethics: Perspectives on the Practice of Theory. Oxford: Oxford University Press.
Crane, A. & Matten, D (2004). Business Ethics: A European Perspective. Oxford: Oxford University Press.
Dienhart, J. (2000). Business, Institutions and Ethics. Oxford: Oxford University Press.
Hinman, L. (1998). Ethics, a Pluralistic Approach to Moral Theory, (2nd Ed.). California: Harcourt Brace College Publishers.
Parker, M. (1998). Ethics & Organisations. London: Sage Publishers.
Shaw, W. (1999). Business Ethics (3rd Ed.). Massachusetts: Wadsworth Publishing Company.
The U.S. Department of Commerce (2004). Business Ethics: A Manual for Managing a Responsible Business Enterprise in Emerging Market Economies. Web.
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This assessment on business ethics in Global Enterprises is designed to identify and understand the best ethical and critical decision making options, consequences and legal provisions on management process (Dienhart, […]