The ethical and moral concerns ignored by the three Tobacco companies - Essay Example

?Running Head: CONTEMPORARY MANAGEMENT ISSUES Contemporary Management Issues of the of the Contemporary Management Issues Introduction Companies that are operative all over the world have to follow certain ethical standards in order to protect their consumers from any health related negative consequences. There are certain codes of ethics that the business companies should accept and implement in their working setups. It is really essential for all the organizations whether they are working globally or nationally. By following ethical and moral concerns, the companies can benefit not only the consumers, but in the long run, themselves by making strong relationships with the consumers. Theories on Business Ethics and Moral Issues Many theories are written for describing ethical and moral issues in business setup. This paper will incorporate some of them that are related to the issue under discussion. Ethical egoism, utilitarianism, care ethics, social contract theory, due care theory and social cost view theory are discussed and implemented on the case that is summarized under the next heading. Summary of the Case Philip Morris, Reynolds and Liggett, the three renowned tobacco companies are accused of deceiving the public with incorrect information about their products. U.S Department of Justice held responsible the three companies of forming Tobacco Industry Research Committee (TIRC), which ensured that smoking is not injurious to health, which is wrong. The Tobacco companies denied addictive capacity of nicotine and cigarette being the cause of lung cancer. The companies are also accused of targeting children as users of their products. According to the charge, the companies were ethically responsible for testing their products and providing the tested information to their consumers. Tobacco being enough risky and dangerous should be fully informed to the consumers. In place of informing the current and potential consumers, the companies concealed the harmful effects of their products, which were addictive, risky and eventually killing. Last, but not the least, the companies’ targeting of children as potential consumers of tobacco products cannot be approved as negligible issue. Objectives of the Assignment To evaluate the ethical and moral concerns ignored by the three Tobacco companies. To apply various ethical theories to evaluate organizations’ duties to consumers. To implement the ethical theories on the case of Tobacco companies. Critical Discussion of Organization’s Duties to Consumers Theories on Duties to Consumers Social Contract Theory Study of the cited theory indicates it as a classical example, which addresses the individual’s ethical and political responsibilities, which is implied or comes out through an agreement with the other individual of the society. It can be in the form of laws, written and unwritten agreement, social norms and customs of the society (Binmore 1998, p. 57). However, the essential moral duty of a company is to own its customers and to provide its products that live up with the dreams of customers’ expectations so that they may enter into agreement with them for a multiple choice. It may be expressed or implied that a seller should identify the quality of its products to its purchasers (Binmore 1998, p. 57). It is the moral duty of a seller when he enters into contract with any customer, he should disclose what he or she intends to buy and what the terms of sales are (Lessnoff 1990, p. 79). The seller is duty bound to intimate the customer of any characteristic of the product (good or bad), which could be instrumental in deciding about the product’s precise value. He should also inform the customer about ingredients, operational cost, its rating besides other applicable standards. Nonetheless, misrepresentation about the product may cause confusion for the customer in selecting the right product as per his needs (Lessnoff 1990, p. 79). Due Care Theory The Due Care theory is in favour of manufacturer’s specialized knowledge about the product so that they may be in a position to appraise risk and associated mitigates to its customers. In otherwise situation, the company will have to fix the responsibilities with regard to designing of product and its allied risks to assess the level of risk acceptance (Beauchamp, et al 2004, p. 55-56). Therefore, the production should be in a way that it should not carry any defective side. For a defective free production, testing under different stages is eminent in selecting the material to stand up to all its probable usages. Business should adequately place quality control over material that is to be used for the manufacturing of the product besides the checks and balance on different stages of the production. The products that are offered by the business firms should not be damaging and as per customers’ interests. The due care theory is the consumers’ theory as it emphasizes on taking care of consumers extensively (Beauchamp, et al 2004, p. 56). Social Cost View Theory The social costs coupled with the responsibility make the manufacturer responsible for all odds inclusive of those that could not be predicted or eliminated at the time of manufacturing. According to the laws of the land and the society norms, manufacturers are strictly responsible and accountable for all risks linked with the product. Internal and external costs incurred on the product, manufacturer has to bear the entire cost of the production (Coleman & Coleman 1994, 49). Here, we will force the manufacturer to reduce the risk of level to make it beneficial for the consumers in terms of its lower costs. By this way, the manufacturer will make it more comfortable for the consumers to efficiently use the resources of the society. The product should be a mere waste if not in demand. Secondly, the manufactures have to pay the price through their noses for the injury that has caused greater care and to minimize the number of accidents (Coleman & Coleman 1994, 49-51). Implementing Theories on the Case Social contract theory can be applied on the case of the three major Tobacco Companies as the companies under the mentioned theory have a duty to act as per the laws applicable for marketing and selling their products to the consumers. The companies should have a contract view according to which, they should appear as per their claims. As far as this situation is concerned, the companies are ethically liable as they failed in the provision of right information about their products. According to the theory, the companies were supposed to inform about each and every aspect of their produced products, while in place of informing rightly, the companies used fake and wrong information to mislead the people (Binmore 1998, p. 57). This depicts that the Tobacco companies were ethically and morally responsible. The companies are deceivers as they misrepresented their products by hiding their harmful effects. According to the Due Care theory, the businesses are custodians of consumers’ interests (Beauchamp, et al 2004, p. 56). The manufacturers of products must evaluate the risks involved in their production. In this case, the Tobacco companies have purposefully neglected the risks involved in using tobacco products such as cigarette, nicotine and other stuff. The companies have even rejected the harmful effects of tobacco products and have supported in researches showing the products as not responsible for any kind of diseases. This information is wrong and erroneous. The companies did not pay their part as the custodians of consumers’ interests, which is essential under Due Care theory. The manufacturers should conduct researches for analyzing the advantages and disadvantages of their products (Beauchamp, et al 2004, p. 59). There should be instructions with the usage of harmful products and this was also not done. The Tobacco companies failed to do so due to which, they are ethically and morally defaulters. Social cost view theory states that manufacturers are responsible for their products whether they are advantageous or disadvantageous (Coleman & Coleman 1994, 49). In this case, the Tobacco companies are responsible for spreading the usage of tobacco products for their own interests. The consumers of tobacco products are diseased and disadvantaged health wise, but the Tobacco companies did not held themselves responsible for taking care of the effected. They have to bear the cost of adversity caused by the usage of their products; however, they did not pay the cost for anything. In this manner, they are ethically liable and are accountable for their actions towards the consumers. Critical Analysis of Theories Theories and Concepts Normative stakeholders theory can be defined as a theory that assists in giving reasoning for actions that should be taken for the consumers. The moral implications related to an action performed for the stakeholders are considered in normative stakeholders theory (Phillips 2003, p. 41). The normative stakeholder theory can be further divided into other theories such as ethical egoism, utilitarianism, egalitarianism and non-egalitarianism. However, we will incorporate ethical egoism and utilitarianism only. Ethical Egoism states that an action is morally justified provided that the conditions so demand. It could be favourable or unfavourable in respect of the action of the agent. Ethical egoism can be fully described as a theory dealing with self-interest and personal needs. An action or a doing is ethically right if it fills the purpose of self-interest of a person (Thiroux 1998, p. 62). However, this personal interest should be rationalized, which means that the steps leading to self-interest should come under the category of rationality. Utilitarianism states that if an action is more favourable than unfavourable to everyone, it is considered right action provided that its’ repercussions are more favourable. According to utilitarianism, pleasure should be for everyone and no one should be eradicated from the list of concerned people. Any product that is created should be looking for betterment of all and the harmful effects should be nearly negligible (Mill 2007, p. 39). Therefore, the actions that are taken should be targeted for maximum number of people. Descriptive stakeholders theory can be described as a theory that deals with the interests of stakeholders. According to the theory, the decision making processes are analyzed in terms of their moral implications for the stakeholders. The descriptive stakeholders theory looks towards what businesses do and the reasons behind their actions and decision making (Phillips 2003, p. 43). According to the instrumental stakeholders theory, the businesses take into account those concerns of consumers that are advantageous for the business such as financial objectives. Even the consumers as stakeholders become a part of the business proceedings considering their participation in meeting business objectives (Phillips 2003, p. 44). Care ethics states that such actions should be taken that are caring and are supportive for building relationships with people. The people who are vulnerable or at stake should be taken care of and must be supported and such actions should be taken that result in consequences that are supportive for the people. According to the care ethics, a person or a business should take such steps that are accommodating, maintaining and furthering present relationships (Engster 2007, 68). Evaluation and Implementation of Theories on the Case The Tobacco companies as per ethical egoism saw their interest in manufacturing the tobacco products and neglected the interests of others. What the companies performed was ethical as per their interests and thinking. However, the theory of ethical egoism emphasizes the use of rationality in identifying self-interests that is an important point (McWilliams & Siegel 2001, p. 52). The Tobacco companies were required to analyze their behaviour and the people that were likable to be affected negatively. It is a concern that self-interests should not be harmful for others prevalent in the society. If any business wants to stay for a longer period of time, it has to inculcate the confidence of the consumers on its marketable products aiming at to increase their market share (Hill & Hupe 2002, p. 45). By this way, the company will increase number of customers and is able to add many customers in the fold to sell their products more and more. If the company focuses its attention towards its economic gains, even then it has to take care of its consumers as stakeholders of business. According to the instrumental stakeholders theory, the Tobacco companies in paying attention to their economic gains did not notice their benefits associated to the concern towards consumers. To focus attention on the satisfaction of the customers is not important but the interest of the customers is important. Utilitarianism deals with maximum satisfaction of maximum people (Mill 2007, p. 39). The Tobacco companies disqualify by rejecting the notion of maximum happiness of people as their set strategy was not for longer period. As people will identify the negative impacts of the tobacco products, they will start leaving them; hence their loyalty with the companies will be no more. Utilitarianism eventually puts everyone is a stable relationship as consumers and business take care of each other and regard betterment for everyone. It is the social responsibility of the business entity to safeguard the interests of the owners of the business along with employees, suppliers, consumers, government and major market players (Lowry 1973, p. 82). Every business has the prerogative to use certain methods to woo the customer like usage of various resources, e.g., material, machinery, human, capital, etc (Beauchamp, et al 2004, p. 37). All these resources are supplied by society. From this point of view, it becomes the responsibility of business to provide better facilities to society. By doing this and through the medium of consumer protection, business gets an opportunity to discharge its responsibility towards society. Care ethics believes in taking care of the consumers. The tobacco companies failed in taking care of the consumers as they defaulted in the provision of their products that were harmful for the users. The companies concealed the information of their harmful products seeing only their interests and taking no care of consumers. The Tobacco companies have made morally flawed decision makings as per descriptive stakeholders theory. It was the moral obligation of the tobacco companies to take care of the interest of their customers (Shaw, et al 2010, p. 18). Therefore, they were required has to keep itself aloof from making inferior quality of products, misleading advertisement to sell the products and not targeting children towards consumption of their products. If such things happen in the business entity, it means that they are nurturing unhealthy business practices and keeping away from the ethics (Lowry 1973, p. 91). Conclusion and Findings The three Tobacco Companies Philip Morris, Reynolds and Liggett are accused of concealing harmful information about their products from the consumers. The companies also were involved in conducting erroneous researches that were misleading for the consumers of their products. U.S. Department of Justice sued the three tobacco companies and asked them to pay the fine, which equals to all of their profits that they earned from their inauguration. The companies see only their interests in manufacturing their products and lacked to follow ethical and moral obligations in their role towards the consumers. Ethical theories regard the role of the Tobacco Companies as unethical and immoral as the people who were consumers faced adverse consequences at the hands of the three companies. Recommendations The tobacco companies should conduct true researches for finding all the harmful effects of their tobacco products. They should also conduct researches to minimize harmful products that can become a reason of causing diseases in consumers. Overall, the companies should regard the interests of consumers along with their own interests as business relationships with consumers are based on caring strategy of the businesses. Bibliography Beauchamp, T. L., Bowie, N. E., & Arnold, D. G. (Eds.). 2004. Ethical theory and business. Oxford University Press, New York. Binmore, K. G. 1998. Game theory and the social contract: Playing fair (Vol. 2). The MIT Press. Coleman, J. S., & Coleman, J. S. 1994. Foundations of social theory. Harvard University Press. Engster, D. 2007. The heart of justice: Care ethics and political theory. Oxford University Press, Oxford. Hill, M. J., & Hupe, P. L. 2002. Implementing public policy: governance in theory and practice. Sage, London. Lessnoff, M. 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