It has come to my attention that the bunch of toys produced this month does not meet the required standards. After the quality assurance team ran the usual quality tests on the new bunch of goods, we realized that the goods do not meet the required standards. Among the sub-standard goods is a large shipment of toys meant for the elementary school children that was to be transported to South America at the end of the week before the opening of the schools. The amount of lead in the whistles is slightly above the required amount for children below seven years of age. If we proceed to sell these toys as they are we will be breaking the law therefore risking a lawsuit which would not lead to great fine but also damage the image of the company. On the other hand, if we continue repair and repackage the goods it will lead to a massive loss. I therefore came up with several options to solve this issue and the possible consequences of each.
One of my main considerations when making my decision was the goals of the company. One of the main goals of the company is to produce quality products that suit the target market. The quality of products we have produced in the past has made our company grow day from day to day. After consulting with the marketing department, we realized that our biggest strength is in the quality of our goods. We have created a well-established image in the market, which has made customers to prefer our goods to others. Because of the quality of our goods, we sell these goods at a slightly higher price than the rest of the companies and the demand remains high. The fact that we have not been involved in any legal battles in the past has also added to our strength. Therefore, we can opt to repair the goods and repackage them in order to supply quality goods. We can communicate with our esteemed customers to negotiate about the little delay while we repair and repackage the goods.
This move will however have various advantages and disadvantages. Repairing and repackaging the goods is a process that will consume a lot of time while doing it. If we have to repair the whistles and repackage them then we will not supply the batch to South America at the end of the week. On the other hand, the cost of repairing and repackaging the goods is quite high. The whole process of repackaging the goods will cost a hundred thousand dollars. This will be a loss to the company. However, this move will maintain our image and help us maintain the customer trust we have in the market. It will also help us avoid legal battles, which might destroy the reputation that we have built over the years.
This option has consequences legal, ethical, and financial. Ethically we will have played our part right. The ethics of this company do not allow us to supply substandard goods consciously. The most ethical thing to do would be to repair the goods before we supply them to the consumers. We will also avoid in legal issues concerning the quality of our goods. The consumer protection laws will have no issue to deal with us. However, we will fail to supply the goods to our customers in South America, which might be an issue of contention, as we will have broken the time agreement in our contract with them. Financially, this move will affect the company negatively. First, we will fail to supply the goods when the demand is at the peak. This will mean that we will lose many potential customers. The whole process will cost us a hundred thousand dollars. This means we will have raise to the prices of the goods to avoid making losses. Financially this move will lead to losses in the company.
The second option would be to change the target market. The law of the United States bans the lead levels for children below seven years of age. Through advertising, we can target the children above seven years of age. We can create labels on the said toys that recommend the toys to be used by children above seven years of age. This move will not affect the marketing of the goods a lot. When it comes to toys, many parents rarely read the instructions and labels on the toys. Few of the parents will read the recommendations meaning the financial impact will hardly be affected. Alternatively, our target market can be other countries where the laws of those countries do not limit the amount of lead in the whistles. We then will create labels on the goods banning the use of the toys in America. ie ‘not for sale in America ‘. This will provide a market for this bunch of goods thus avoid losses.
This move has various advantages and disadvantages. Changing the target market will expand the markets of our goods in future. If we are able to convince older children to use the toys then the move will increase the market for our goods in future. On the other hand exporting the goods to new countries will also expand the market of the goods in the future. However, it is risky trying to change the perception of the customers about the goods. Many buyers are sensitive about the safety of their children. if they get the mentality that the toys might be dangerous to the young children, this mentality might be permanent therefore destroy the brand name permanently. The cost of finding new clients abroad might be high and involving. Finding new target market will not provide the goods to the already ready market and therefore it might be an opportunity for our competitors to capitalize.
This option however has various financial legal ethical issues. Branding to be used by older children would not assure that only older children would use them. The majority of these toys would end up being used by underage children. This would be unethical, as the children would use substandard goods. The fact that we all are humans would also make it unethical to export goods that are unsuitable for human in our country. This would also raise legal issues. If the toy had a bad effect on the children then this could sue the company. The company would also have issues with the quality assurance agency if they realized that the goods were harmful to little children( Cseres, K. J. 2005). In order to export the goods there would be many legal processes from both the source country and the destiny country. The advantage of this option is that the chances of having a child being harmed from using the whistle are minimal and therefore low chances of having a suitcase filed against the company. Financially, this option would be a risk. If the age limit would work more effectively, then the sales would dramatically go down. There is also a great risk if the effect of the age limit is more permanent on the consumers, then the decline in sales will also be permanent.
The other option would be to continue with the sale of the goods but warn the consumer of the high levels of lead in them. This warning will ensure that the consumer is aware of the consequences of the product they are buying. Then we can reduce the price to make the deal more suitable for the consumers to buy the substandard toys. The lowering of the prices will ensure that the consumer has a closer look on the standards of the goods. The new prices should be set in way that the company does not incur losses while dealing with this issue.
The advantages of this option are that the company will not incur extra costs. Since the goods are already made then the deliveries will be done on time thus not lose any potential customers. Providing the buyer with information of the deformities of the product ensures that the people buying the goods already have the knowledge of their condition thus preventing any legal issues. However doing this will also mean that we will lose the trust of some of the clients, which would be bad for the image of the company. Lowering the prices would also mean that the company would also reduce the profit margins of the company.
This move would ensure that the transparency of the company is upheld. The fact that the clients will know that the goods do not meet the required standards will ensure that the company is not responsible for any consequences of the use of such products. Legally the company will be safe, as the warnings on the label will have given the needed notice of the quality of good to the consumers. Financially this move will ensure minimal cost incurred and will have a minimum long-term effect on the consumer loyalty.
I therefore would recommend the third option, which is to sell the goods as they are with a warning of the high levels of lead on the whistles. This move would ensure that the transparency in the company is very high therefore helping us gain more trust from the clients. On the other hand, this move will not prevent the company from making massive losses but also capture new clients who especially from the lower class who normally go for affordable prices. This move would have mixed reaction on the customers. The customers who are careful on the quality of goods will definitely not buy the goods. The number of people in this category is few therefore the impact will be minimal. The other group of customers comprises of people who are more interested in the price of the goods. The sales will therefore be high despite the notice that the goods do not meet the recommended standards.
The essence of ethical standards is to maximize the positive impact and minimize the negative impact of a business activity in a community. The company not only needs to make profits but also needs to ensure that the quality of the goods meet the required standards. in cases of accidents and production of sub-standard goods it’s also the duty of the company to notify the consumer of the error so that the consumer knows the consequences of using the product. It is also of great importance to the consumer if the prices were lower because the goods do not meet the required standards. Of all the options we had, the only option that would ensure that we uphold social responsibility and still make profits, the third option is recommended.
Introduction:
When running a business often we find situations that we have to make decisions that can affect different people in different ways. Every decision made in the company affects the wellbeing of the staff, the consumers, or even the community at large. It is therefore important to consider the ethical implications of every decision made by the management. The measure of what is ethical or not is not defined by either culture, law or religion. It is determined by the need to do what is right despite the cultural, economical, and religious implications of the action. We should therefore develop an ethical decision making policy, which will ensure good relationships both internally and externally. (Collins, D. 2009).
There are several approaches one could use in making ethical decisions. One of these approaches is the utilitarian approach. The utilitarian approach is based on doing the lesser evil action. In many cases, every decision made has a positive effect and negative effect. Before making a decision, one has to review the possible effects of the decision on various parties involved. He then chose a decision that strikes a balance between its negative and positive effects. The most important aspect of this type of decision-making is the possible consequences of every decision. In managing a business this method is very important in ensuring that the decisions made in the company do not affect any of the concerned parties negatively. This approach would be beneficial for the company in ethical decision-making. It would ensure that there is a balance of the positive and negative effects on all the concerned parties involved. Every decision made should ensure that the outcome of it will be of common good to both the company and the society at large.
The other approach to consider in order to make the correct ethical decisions is the rights approach. In this kind of approach, ethical decision-making involves putting into considerations the rights of the parties involved. This ensures that all the parties involved have their interests defended in the decision making process. This type of decision-making puts into consideration the laws defending both humans and animals. Every decision made must promote conservation of both human and animal life.( Collins, D. 2009). An ethical decision gives the parties involved the right to decide on matters that affect their human rights. Decisions in all leadership positions should uphold the moral human right of choice. It is good that every person performs their duties out of their own volition without being forced by any person or party.
Having a code of conduct is beneficial to every company. The code of conduct states the expectations of the company on the behavior of all the parties involved in the company. This code of conduct dictates the behavior of people in various situations and circumstances in the company. it protects both the clients and employees from unfair treatment from their seniors. The code of ethics states what is expected of every worker and the limits of the people in authority in commanding their workers. This therefore protects the workers from being exploited. It also promotes goodness in everyone. When a good code of conduct is upheld there is a good relationship between workers and clients. This goodness promotes cooperation and goodness between the parties involved. The other advantage of having a good code of conduct is that it helps bring out a good image of the company. If the company has a good code of conduct, the workers are motivated and therefore deliver more. A good code of conduct also helps in creating a good relationship between the company and the society therefore creating a good image in the community.( Moon, C. 2001).
Precious shipping Public Company Limited is a company, which has employed a significant and elaborate framework to enhance a significant outlook in ethical values in the company. The company is committed in committing business with an articulate degree of moral values. This implies that the company is on the look out to ensure that it does not only conduct business but improves self-value and that of the stakeholders. In response to this virtue, the company has outlined the responsibility of every administrative member within the company. The directors, executives, and staff have been tasked to uphold the integrity of the business organization as stated in the firm’s code of conduct.
Major virtues outlined by the company include, honesty, integrity, trustworthiness, amongst other numerous aspects that define morality and virtues of value within the organization. The employees and administrative agents are expected not only to carry out business but also to do so within the jurisdiction of the code of conduct. These employees should commit their loyalty to the company to ensure that the company accomplishes its objectives in the short-run as well as in the long run.
Confidentiality is very crucial within the company. The company ensures that there is confidentiality amongst the employees. They are not allowed to share any information about the processes that go on within the company. All the employees take oath to protect the interests of the company as well as to protect the information of the company. These employees develop a responsible attribute which they carry to any given environment especially other companies. The policies of this company ensures that the company has a better understanding of the obligation of their profession rather than their immediate tasks, such that they can fit in any given role throughout their career.
The company meets its societal obligation in many ways through ensuring that it undertakes constructive business, which ensures that the interests of all stakeholders are well addressed in a definite manner. The company enhances a safe and healthy working environment and more so, ensures that a comprehensive policy on safety, occupational health and the Environment is put in place. Constant education is done to achieve a better understanding of the manner in which the every task within the company.
Every company should embrace ethical and transformation leadership within all its operations. The code of conduct should be the principle base line upon which, all the company’s operations should be undertaken in running the company.
References:
Business Ethics and Code of Conduct. (n.d.). Home. Retrieved April 26, 2013, from http://www.preciousshipping.com/CorporateGovernance/BusinessEthicsandCodeofConduct/tabid/74/Default.aspx
Collins, D. (2009). Essentials of business ethics: creating an organization of high integrity and superior performance. Hoboken, N.J.: John Wiley & Sons.
Cseres, K. J. (2005). Competition law and consumer protection. The Hague: Kluwer Law International ;.
Moon, C. (2001). Business ethics. London: Economist.
