Organizational Business Ethics and Law - Essay Example

? Business Ethics and Law Introduction Business organizations are established to serve the interests of the investors and stakeholders. They are guided by existing regulations and communal ethics in making their choices. The aim of the investors is to build up wealth from their capital investments. Stakeholders normally clash with the goals of the investors (Murtishaw & Sathaye, 2006). However, managers rarely take concern of the stakeholders and in most cases they pursue their own ambitions. Although investor’s desire is to have gains from their capital, managers’ desire is to have stable jobs, improve their status and compete effectively with their rivals (Marjorie, 2001). Basically, the interests of stakeholders are to increase their benefits from the organizations. To achieve this goal, business has to incur cost and this will reduce the earnings of investors. Therefore, in most cases managers compromise the interests of stakeholders in order to increase the income of the shareholders. Question one Business owners invest their resources in businesses and appoint directors to run those businesses on their behalf. This is because in most cases the owners of the capital lack expertise to run those businesses by their own, or they have other things to attend to hence they are left with no time to manage their own businesses (Adam, 2009). Sometimes even where they are present the businesses are may be too enormous for them to run on their own. The directors are given authority to mobilize the resources of the investors in a way that will maximize returns for the investors. Therefore, managers have a duty to ensure that their activities are focused on increasing the returns for investors. However, they also have to ensure that the company’s stakeholders are considered when making decisions for the company (Cameron, Seher, & Crawley, 2010). These stakeholders include government, the community, consumers, suppliers and even the business rivals. These stakeholders are very crucial in any situation because their individual decisions will influence the position of the business. The argument of Joseph Johnston is that organizations are established to serve the needs of both stakeholders and the shareholders (Wettstein, 2009). According to stakeholder’s theory, in case of any clash of significance between the shareholders and investors, the managers should compromise the investor’s benefit for the sake of stakeholders. The investors concern is to reap the best form their investments. The clients concern in the business is to have a constant supply of superior products at affordable prices (Ananymous, nd). The public want to ensure that the organization is not oppressing people. The employees want to get the best pay from the organization. Different stakeholders have different concerns in the organization (Bebchuk & Fried, 2004). In actual sense, I believe stakeholder’s theory does not work because of inconsistency of interests among the parties concerned (Cameron, Seher, & Crawley, 2010). Managers are in control of the organizations and they are responsible for setting strategies and meansto achieve them. Since the interest of the investors is to create more wealth their desire is to invest in ventures which guarantee them greater returns. However, in most cases ventures that have higher returns are prone to perils (Bomann-Larsen & Wiggen, 2005, p. 76). Therefore, managers generally do not like risking and desire to safeguard their jobs. As a result, the managers invest shareholders resources to less risky ventures despite their decreased returns to ensure that their jobs are stable. On the other hand, stakeholders such as clients will desire superior products at affordable prices. Producing superior commodities requires extra resources which results to increase in prices for the commodities. Since managers also want to ensure that their employers have vast returns, most of the time they charge higher prices for inferior products (Cameron, Seher, & Crawley, 2010). The government as a stake holder is interested prosperity of the organizations so that they can make huge revenue from the tax levies on the business returns (Connelley, & Tripodi, 2012, p. 51). The government provides security to the business and trading licence with an aim getting revenue in form of taxes. However, in most cases the managers do not declare the actual gains from the trading operations hence the interests of the stakeholder principle fail to apply. The workers interest in the organizations is not adequately taken care of. For example, managers overwork their employees while they give them meager pay (Charles, 2004, p.179). The working environment is not conducive for the workers since the managers want to create more wealth for their employers. This is another cause of failure of stakeholder’s theory. Finally, most of the organizations are not willing to own up for their detrimental impacts on the environment (Weaver, 2007). Most of the business activities results to serious damages on the surroundings. The organizations responsible are supposed to pay for these damages they cause to the environment. However, sometimes these organizations rarely accept their responsibility and some of them bribe the authority concerned to cover up for their damages to the surroundings. The effects of those damages are experienced by people who did not enjoy any benefits enjoyed by the concerned company (Connelley, & Tripodi, 2012, p. 47). Therefore, businesses should be responsible for their acts and should share their benefits to the stakeholders appropriately. Question 2 In most cases, managers are faced with situations where they have several options and required to select the most excellent option. As a result, managers have to evaluate different alternatives in order for them to arrive at a concrete decision. The criteria are to take the option which has superior payback among the existing options (Curry, et.al, 2012, p.68). Therefore, managers have to consider all situations using similar scale in order to achieve consistent results. However, those concerned with weighing of alternatives must ensure that the benefits accruing from the available options are greater than the expenses they will incur in making valuation. This approach may result to flaws because some parameters cannot be valued in monetary form (Fletcher, et al. 2003). Since their market value is unknown, it is not easy to convert those benefits or expenses into monetary value. Therefore, some activities may be ignored if they are considered inferior and lacking monetary value. There are some circumstances where some activities may be vital even if their benefits are lower than expenditures (Ron, Agle, & Wood, 1997, p. 876). This may be the case of critical commodities such as healthcare, environmental safety, defense and education. It is for this reason that the government has to get involved in providing those services to the public which otherwise would be abandoned by the personal financiers. In other situations, the benefits accruing from some activities might exceed the cost associated with implementation of that activity, but the activity may not be morally upright. According to utilitarianism theory, the benefits of the activities are determined by the fulfillment they give to the society. However, different individuals perceive benefits and costs differently hence cannot perceive them in a similar way (Friedman & Samantha, 2002, p. 14). For example, if the benefits were to be valued in monetary form, one dollar of benefit drawn from a certain activity would be more satisfying to a poor person whereas it may mean nothing to a tycoon (Mahmudiy & Pavlin, 2010). Corporate sustainability is the modern tactics being adopted by the corporate business world to ensure that their activities create maximum benefits for the current generation in all aspects of lives as well as taking regard for the upcoming generations (Walmart Sustainability Report, 2010). This strategy requires businesses to take responsibility for their actions by and ensure that their activities result to improved consumer satisfaction (Levine, 2010). They should also be concerned about their surrounding and therefore, they are required to adopt techniques which will ensure that they counter their negative effects on the environment as a result of their activities. The difficulty facing businesses in this approach is to measure the constructive impact of sustainability (Freeman, Wicks & Colle, 2010). However, this approach enables organizations to reduce the expenses of hiring employees because it increases their output and period they work for the organization. Also, managers are able to cut down the fee of power and environmental pollution because they are able to come with up to date skills which are more efficient (Hongxia, 2011, p. 46). The overall benefit of sustainability in the organization is increased earnings resulting from expense reduction and improvement in efficiency in means of wealth creation. Question 3 Stakeholder analysis involves recognition of various individuals or groups that are going to be influenced by the decisions taken by the management of organization, and classifying them in depending on the how they will affect or be affected by those actions (Hemmati, et al. 2002). The results of the stakeholders analysis is essential in determining how the needs of those individuals and groups will be deal with during the implementation of the plan or policies in order to avoid disadvantaging any individual group. Stakeholder analysis enables the project team to have a smooth execution of their plans since they are able to identify all conflicting issues among the stakeholders and resolve them before they impact the execution of the plan (Hein, Tziolas & Osborne, 2011, p. 229). Therefore, the organization should put the interest of all stakeholders into consideration by providing for their needs both at present and in the future. Stakeholder analysis contradicts with official duties of management and board of directors because management is inclined to increasing the benefits of the shareholders at all cost with due regard for the stakeholders (Samantha, 2012, p. 289). If the management decides to incorporate all the needs of stakeholders in their plans before execution, they will have to spend a lot of resources in providing for all the needs of stakeholders. For example, they will have to spend extra resources to provide their workers with better working conditions and remunerations, they require additional cost to improve the quality of their products, alleviate environmental hazards, and offer products at an affordable prices as well as serve meet other requirements (Turner, et al., Eds. 2002). This in turn will result to low returns for the investors hence management will not be able to meet their fiduciary duties. Question 4 According to Hosmer (2000) Hosmer model is used in forecasting the threat of an accomplishment by assessing whether the experiential actions rates correspond or does not correspond with the anticipated occurrences in situations under scrutiny. From our case study, the delivery of wrong wafers in the city will benefit the sellers who livered those products (Kline, 2005, p.121). This is because the products were not returned despite their substandard class. Also, consumers in ghetto will enjoy the product at a reduced price (IEA, 2007). The distribution of impure products had detrimental effects on the buyers of gourmet food departments (Marc, 2008). Their character was spoilt by offering infected food boxes to their clients. Also, since their pay is based earning from sales, their gains declined by selling their products at inferior price to ghetto people. The clients who purchased products form gourmet store did not enjoy the products as they expected. The suppliers of products to gourmet food department and the transporting agent were able to apply their privilege since they were paid their dues (Hongxia, 2011, p.33). Also, gourmet buyer exercised their rights by selling their products to ghetto dwellers at a reduced price. Gourmet food department did not fully enjoy their dispensation since they could not return the infested products to the supplier (Marc, 2008). This was also the case of buyers of products in ghetto who did buy products infested with insects. Consuming of products infested with insects could be detrimental to the health of concerned parties and could tarnish the reputation of sellers (Robert, 2003). The gourmet food department should have returned the products to the supplier and get substitute of the same with products of superior quality. This would enable the clients of gourmet food department to get reimbursed for the goods which they had bought and enjoy the right of superior quality products. The sale of insect infested products will result to loss of profit for the gourmet food department because they are selling them at reduced prices to ghetto people (Jussi & Petri, 2004, p. 57). This may also spoil their name because of consumers who will purchase products containing insects and probably have to throw them away. In some cases, consumers of the spoilt products may become unwell due to contamination of the products. Legally consumers are entitled to goods of superior quality, which are well for consumption (2008). Therefore, those products were not worth to be eaten by human beings hence the gourmet food department should have returned them since they were not of the right value. The suppliers have a moral accountability to ensure that the products they sell to their customers are of correct value (Samantha, 2011). The buyers at departmental store and particularly gourmet food department have responsibility to ensure that what they offer to their consumers is derirable for human consumption (Johnston, 2005, p. 42). As an employer, gourmet food department negated their ethical duty by forcing Sarah Goodwin who is an employee to distributed insect infested products to the ghetto dwellers. As an employee, Sarah also has an ethical duty of ensuring that they sell goods of the right quality to their clients. Conclusion Business managers execute their duties to ensure that they satisfy the interests of the shareholders and stakeholders. These interests in antagonistic hence managers should ensure they are guided by morality and existing rules to ensure effective execution of their plans. However, in most cases the managers pursue their own goals hence ignoring the interest of the corporate world. Bibliography Adam, W. 2009, Strategy for Sustainability: Business Manifesto. 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