Business Ethics in Global Coffee House - Case Study Example

?Business Ethics Table of Contents Executive Summary 3 Ethical Dilemma Faced by Andy 4 Possible Decisions and their Implications 4 Conflicting Actions on the Basis of Ethical Framework and Principles 6 Final Decisions and Considerations 8 References 11 Executive Summary This study aims at critically analysing the case study of Global Coffee House, with respect to Andy’s ethical dilemma which he faced pertaining to an accident that occurred due to his cost saving decisions. Andy was in a dilemma whether to cancel all the orders of cups and lids from new supplier, incur cost, or ignore the incident and save his goodwill. Since in the restaurant industry service and products play an important role, Andy has to also consider the relevant ethical issues. The pure theories of ethics reveal an extreme characteristic, and they are traditional. Neither complete dedication towards profit nor total social service would help any business in the present scenario. In the modern days the hybrid theories of ethics are the most prevalent. It is when ethics has to be followed and profits have to be saved. Andy has to prioritise tasks but cannot eliminate any aspect because both are significant. He and his team have to assist customers in handling the coffee cups and lids. Suppliers need to be informed regarding the latest occurrences, and employees should be involved in decision-making. Organisations following ethics not only to reap profits, but also deliver excellent services to customers, serve the society and make their employees proud. Ethical Dilemma Faced by Andy This study is based on the theme of business ethics in hospitality or tourism. The aim of this study is to discuss and evaluate the case study of Global Coffee House, owned by Andy, and analyse the ethical dilemmas that Andy had to face. This will also assist in identifying what probable solutions he could identify, and what were the implications of such consideration. It was found that due to poor quality of hot cups and lids a customer was badly burnt due to coffee spill. The customer was taken to hospital and John, Andy’s assistant, apologised. However Andy was in ethical dilemma after knowing the matter because they engaged a new supplier to offer hot cups and lids at low cost, so as to decrease cost and support the expense of refurbishment. Andy was in dilemma, whether to offer good cups and lids to customer even if it is costly, as this will assist in avoiding accidents. On the other hand if he supports profit making strategy then cost reduction decision was correct. He was facing mental conflict about which one to consider. Such situation is also known as ethical paradox. In Andy’s case customer safety was equally important as refurbishment because Nancy already had a first-degree burn. Moreover, there were thousands of unused cups and lids in the storeroom and they had also made a contract with the supplier. Possible Decisions and their Implications Andy was into ethical dilemma because he cannot decide whether to dismiss thousands of cups and lids in storage and the contract with the new supplier, for protecting the goodwill of his coffee shop and the customers from accidents, or to ignore it. There were several options for him, which can be better explained with the help of ethical theories. According to the theory of Adam Smith, competitors always take undue advantage of the weaknesses of other players in the industry. Capitalism theory also supports the fact that profitability is everything in business, and there is no room for ethics here. Even the theory stated by Karl Max emphasises on profit maximisation. Following the above mentioned theories, Andy should ignore the accident thinking that it was just a mishap, and will not happen again, and then the suppliers would be happy, refurbishment can be done. In case Socialism theory is chosen, then product safety would be priority as social welfare comes first. Following such ethical theory, Andy would ethically choose to consider customer safety. Apart from this, his relationship with the suppliers would also be stained due to sudden cancellation of orders. Further, due to such a loss technological refurbishment would become difficult because additional fund would be required. In this case stakeholders, like suppliers, would be reacting negatively which will also affect the profitability and growth of the company in return. If such incident is repeated, customers will stop visiting the shop. This will negatively affect the reputation of the business (Blowfield, and Murray, 2008). However, according to the theory of Milton Friedman people should choose those ideas which are profitable in the long run but are ethically and legally correct. Kant also added to this by describing goodwill, humanity, and acceptability as a part of ethical theories. Considering the corporate social responsibility, it can be said that Andy should choose the middle path doing business ethically as stated by Milton Friedman (Born, and Peltokorpi, 2010). . Conflicting Actions on the Basis of Ethical Framework and Principles The ethical problems or applied ethical principles that generally arise within the business environment are known as business ethics. In this section a comprehensive discussion on various facets of Andy’s ethical dilemma would be discussed with strong reference from the theories stated by eminent scholars. Adam Smith suggested that individual in similar business never meet during good times, but they surely discuss about their competitors. Sometime these discussions even exceed the ethical standards when competitors utilise the limitation of other players for their negative promotion. The same thing can happen with Andy, if he ignores the issue of Nancy’s accident. Similar accident might spread a negative word of mouth (Brown, Trevino and Harrison, 2005). In contradiction to this, Milton Friedman promoted the theory of restricted egoism, which stated that people should go for those decisions which are beneficial for the long-term, but this has to be done by following law. However, in this case the long-term goal for Andy would be refurbishment and strong relationship with suppliers. But this cannot be done at the cost of customer safety (Clegg, Kornberger, and Pitsis, 2011). It is the moral or ethical responsibility of Andy to take care of product safety in order to avoid accidents. However, this theory can be also related to the theory of capitalism by Karl Marx, which signifies that production and private ownership of business is meant for the motive of profit maximisation. Capitalism theory has very little to say about ethics because the motive is to generate profit at any cost. Nonetheless, business environment has evolved and capitalism theory is not relevant any more (Cunliffe, 2009). In this context, the theory of socialism can be discussed. As the name suggests, it refers to co-operation, state ownership, equal distribution, and social welfare. Instead of private profit, concentration should be towards customer welfare. However, Andy has started the coffee shop with the motive of earning revenue, and it is not an organisation for voluntary service, so he has to genuinely think about his own profit, along with customers’ safety. Both these theories are extremes which cannot eliminate Andy’s ethical dilemma. In such a situation, the focus should be shifted towards evaluation of normative ethical theories (DeGeorge, 1993). The ethical actions can be studied in the domain of normative ethics. Adam Smith’s theory is one of the normative theories. The theory of Egoism is self-centred, but utilitarian theory on the opposite connects everyone who is a part of the society. Philosophers like John Stuart Mill and Jeremy Bentham were supporters of Utilitarian theories and concepts. However, this theory is not applicable in complex situations as in the case of Andy’s Coffee shop (Deshpande, Farley, and Webster, 1993). In this case, Kant’s theory is somewhat applicable, which includes goodwill, universal acceptability and humanity as characteristics of business ethics. John’s and Andy’s behaviour towards Nancy were signs of humanity, but in order to retain their goodwill, product and packaging safety cannot be pushed behind. In this scenario corporate social responsibility (CSR) of the enterprise need to be discussed. In the domain of CSR, enterprises must include all its stakeholders such as suppliers, distributors, employees, society, and most importantly customers. CSR activities are initiatives or approaches by the business to serve the stakeholders, business environment and receive positive response (Enderle, 1999). As for Andy, even if he does not plant few trees it would not matter, but ascertaining that the suppliers are not cheated, and customers are not injured is a social responsibility. From the above discussion the pure and hybrid theories can be segregated. The pure theories are the theories of Kant, Utilitarian theory, or capitalism theory which follows a fixed and specific path towards business performance. On the other hand the theory of Milton Friedman’s can be considered as the hybrid theory of ethics because he suggests focusing on long-term goal achievement legally or ethically. Andy needs to follow the hybrid theory of ethics because this would solve his ethical dilemma and also ensure long-term goal achievement for him (Fielding, 2006). Final Decisions and Considerations In the previous section, the discussion was mainly on ethical principles and theories which have been stated by eminent philosophers and strategist for ethical consideration in business. In order to provide a complete view of the ethical dilemma of Andy, every perspective and relevant theories have been discussed, so as to reveal the effect on the stakeholders. If the pure theories are considered then Andy has to choose one, which means either he can support customer’s sentiments and safety, or he can see the suppliers and his own profitability and ignore the customers (Martin, and Siehl, 1983). In case he chooses to opt for hybrid theories of ethics which also includes the concept of CSR, he has to identify a middle path through which he can save his profits and also his customers from accidents. Apart from this relationship with the suppliers would also not be hampered. However, in this section the focus would be towards taking the final decision that would solve Andy’s problem (Fisher, and Lovell, 2012) Ethics plays a significant role especially in restaurant industry because they not only sell products but services too. This is an industry where both product and services play an equally important role, so conducting business legally is not all. Focus should be also towards goodwill, word of mouth, values, and visions of the company. Andy has been focusing towards offering the finest coffee to its customers, and ethically sourcing them from different parts of the country. However, ethics also involves not only offering best quality product, but also safely providing the product. At the same time refurbishment of IT framework in the shop will attract more customers, especially the tech-savvy ones (Griffin, and Moorhead, 2011). In the present business environment, profit and ethics are equally important. Without profitability business will not prosper, and without ethics sustainability cannot be attained. The present market condition and rising level of competition makes it clear that sustainability is the way to survive and profitability to grow. The financial decision would be based on the theme of hybrid theories of business ethics. Andy would have to sit with the new suppliers of cups and lids and revise his orders through negotiation (Kotler, and Lee, 2005). He will have to disclose the accident that happened and demonstrate the poor quality of the cup and the lid, like John demonstrated Andy. The refurbishment function should go on, and Nancy should be given medical expense assistance by Andy. This will be Andy’s solution towards long-term growth and profitability. Now there are thousands of cups and lids in stock, so they need to be utilised. For every coffee purchase, a word of caution regarding the cups and lid should be stated by the employees present at the counter. Posters within the shop in front of coffee table stating the instruction to handle the new coffee cups would be stated. This would not cost much for Andy. If coffee can be served to the customers on their tables, then there are less chances of coffee spill (Linstead, Fulop, and Lilley, 2009). Andy was shattered because his cost saving decision backfired and caused accident. However, such occurrences are regular issues and owners in this sector regularly face them. Andy has to conduct a brainstorming session with his employees and his assistant, and put forward the issues. Ethical solution for such a problem would be asked for, to which he would also add his inputs. Finally an effective measure would be chosen and implemented practically. Growth plans should not be hampered, but solution should be identified keeping in mind three things; ethics, profit, and development (O’Reilly, Chatman, and Cladwell, 1991). References Blowfield, M., and Murray, A., 2008. 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